ABU DHABI-- Total S.A.'s (TOT, FP.FR) chief executive Christophe
de Margerie said Sunday 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 Petroleum Corp. (SNM.V, SHASF) 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 kilometers 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 Corp. (XOM), Chevron Corp. (CVX) and OAO Gazprom (GAZP.RS,
OGZPY) 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 re-develop 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 Oil Corp. (MRO),
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.
Write to Summer Said at summer.said@dowjones.com
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