Iraq on Sunday gave French energy giant Total an ultimatum to either end its dealings with the autonomous Kurdistan region in the north or to sell its stake in a giant southern oilfield.
Iraq’s deputy prime minister responsible for energy affairs, Hussein al-Shahristani, also said Baghdad was considering offering foreign oil firms more lucrative contracts, as he admitted a recent auction of exploration blocks had not been as successful as officials had hoped.
Total “was requested to withdraw from this field, and it has been given a certain period to end this case by selling its share to another company or by ending the contract with Kurdistan,” told Shahristani. He did not specify the time by which Total, which said on July 31 that it signed an oil exploration deal with Kurdistan, needed to make a decision.
Kurdish authorities have signed dozens of deals with foreign energy firms on a production-sharing basis, contracts regarded as illegal by Baghdad which insists all such deals must go through the federal oil ministry and prefers per-barrel service fees.
The agreement between Total and Kurdistan came with relations between the autonomous region and Baghdad at a low ebb over multiple festering disputes, including over oil contracts and territorial claims.