Total says unclear if Iraq wants it to exit Halfaya


Total says unclear if Iraq wants it to exit Halfaya

ABU DHABI -- Total chief executive Christophe de Margerie said that it is not clear if Iraq wants the French oil giant to withdraw from a major southern oil field,Halfaya, amid media reports from the Iraqi central government that doing deals with Kurdistan could jeopardize its projects in the south of the country.

Total has recently expanded its Kurdistan assets by acquiring a 20% interest in an oil exploration block there from Canada's ShaMaran for $48 million in cash, plus a reimbursement for costs incurred from April 1 until the closing date. An exploration well is currently drilling on Taza, which is located approximately 80 km southwest of the city of Sulaimaniya.

The move underscores the intense interest in Kurdistan despite the tense political backdrop, as major energy companies like Exxon Mobil, Chevron and Gazprom have ignored warnings from Baghdad and piled into the oil rich region.

Following Total's entry into Kurdistan, Iraq's Deputy Prime Minister, Hussein al Shahristani, told reporters in Baghdad that it must end its dealings with the semi autonomous region or sell its stake in a major southern oil field, Halfaya, according to a report from Agence France Presse. He did not specify the time by which Total needed to make a decision.

It has not been very clear. At least we took it as not very clear, said Mr. de Margerie when asked about whether Total was told to withthraw from Halfaya.

It is true it has been in the press that the Iraqi government made some statements about the fact that Total will have to choose between Kurdistan and the south but for the time being we have decided not to choose, he said.

A source familiar with the matter told Dow Jones Newswires in August that the French firm still sees tremendous potential for oil exploration in Kurdistan and has continued to invest there despite the warnings from the Iraqi government.

Total hopes the current situation will simply deflate, allowing it to remain in Halfaya and keep its assets in Kurdistan, said the person familiar with the matter. They have adopted a wait and see stance, hoping that the Baghdad authorities, after much outcry, will leave things as they are, the person said. Iraqi authorities have blacklisted oil companies that have entered Kurdistan from signing future oil deals in the center and south of the country. Initially, it was only small and medium sized oil groups that flocked to Kurdistan, but Exxon Mobil initiated a rush of major players last year.

International oil companies are increasingly drawn to the region, as contracts to redevelop old oil fields and explore for new ones in southern Iraq turn out to be less attractive than anticipated.

In late July, Total acquired a 35% interest in two oil-exploration blocks in Kurdistan from Marathon, a semi autonomous region in northern Iraq, just days after the central government in Baghdad blacklisted Chevron from contracts in the rest of the country after it entered the Kurdish region.

Dow Jones Newswires

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