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ExxonMobil gives Kurdish autonomy another boost by jilting Iraq

FILE – In this May 31, 2009 file photo, an employee works at the Tawke oil fields in the semiautonomous Kurdish region in northern Iraq.…
By Steve LeVine
BaghdadPublished Last updated This article is more than 2 years old.

Influential ExxonMobil is adding more weight to its support for Kurdish autonomy from Iraq. Facing unhappiness in Baghdad over its year-old defiance of a ban on direct dealings with Kurdistan, ExxonMobil has opted to find another company to take over its interest in Iraq’s supergiant West Qurna oilfield, say people with knowledge of the situation. By abandoning Iraq explicitly to be in Kurdistan, Exxon is making a rare open display of geopolitical muscle.

A flurry of reports was published a week ago after ExxonMobil reportedly informed Iraqi Deputy Prime Minister for Energy Hussain al-Shahristani that it is looking to sell its stake in West Qurna I to another company. I am told separately that ExxonMobil has interest from a few companies in the project, including from at least one global major.

Baghdad and Kurdistan have a tense working relationship in which they do business, but have difficulty deciding how to divide the profits. Over the last year, Kurdistan has built up leverage by offering highly attractive exploration contracts to foreign companies, compared with the miserly terms demanded by Iraq. Baghdad expressly prohibits foreign companies from signing directly with the Kurds, and the majors originally complied in the hopes that the terms would get better. But they haven’t. So, having lost hope, as we have discussed, a parade of oil companies have signed directly with Kurdistan—Chevron, Gazprom, and France’s Total.

But ExxonMobil’s perfidy is something different. Because of its size and history, when ExxonMobil makes a move, it tends to speak louder and create more ripples than its peers (in Quartz’s geopolitical energy indicators, ExxonMobil is one of the Mountains). It was news a year ago when it was leaked that the company signed with Kurdistan. But now, by pulling away from Iraq, it deals a harder blow to Baghdad’s prestige, while conferring more legitimacy on Kurdistan. Could this give the province a further nudge towards independence?

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