Baghdad no legal ground to cancel Exxon deal

Reuters January 31st 2012

Baghdad has no legal right to cancel a major oil contract with Exxon Mobil in retaliation for its involvement in semi-autonomous Kurdistan, the head of Iraq’s parliamentary oil and energy committee said on Tuesday.

“There are no blacklists in parliament,” said Adnan al-Janabi on the sidelines of an oil conference in London.

Exxon became the first major to move into the northern Kurdish region in mid-October when it signed a contract for six exploration bLocks with Kurdish authorities. The Kurdistan Regional Government is locked in a feud with the Arab-dominated central government in Baghdad over territory and oil rights.

The Iraqi oil ministry has said Exxon’s deal was illegal and could result in termination of its contract to develop the major West Qurna Phase One oilfield in the south.

“The contracts (signed) by the central government and the Kurdish region are not fully constitutional. We need to pass the oil law to set up the federal council, which can then approve all of the contracts,” Janabi said.

OPEC member Iraq is still struggling to pass a modern oil and gas law to help settle disputes, including those surrounding oil production-sharing contracts signed by the KRG with foreign companies.

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