CbI View – Oil export dispute pushes Kurds into heart of regional crisis

Lured by a combination of extraordinary prospectivity and attractive fiscal terms, international oil companies (IOCs) are more and more prepared to discount the political risks of signing production-sharing contracts (PSCs) with the Kurdistan Regional Government (KRG), even though those risks are increasing exponentially with the growing acrimony between Erbil and Baghdad. In the past fortnight, France’s Total and the US’ Chevron have accepted blacklisting by Baghdad as the price of securing a stake in potential Kurdish hydrocarbons assets. On 19 July, Chevron bought out the 80% interests in the Rovi and Sarta blocks acquired by India’s Reliance in December 2006, and was immediately blacklisted. Less than two weeks later, Total farmed into Marathon Oil Corporation’s Harir and Safen blocks, which the US company acquired in 2010. It bought a 35% working interest in each block, reducing Marathon’s working interest to 45%. Total signed up before Marathon had completed 2D seismic exploration, indicating its appetite for the Kurdish play.
Published in GSN, Issue 929 - 2 August 2012. Read more