By Geraldine Amiel
PARIS--Total SA (TOT) still sees tremendous potential for oil
exploration in Kurdistan and has continued to invest there despite
warnings from the Iraqi central government that doing so could
jeopardize its projects in the south of the country, a person
familiar with the matter told Dow Jones Newswires.
Total expanded its Kurdistan assets Monday by acquiring a 20%
interest in an oil exploration block there from Canada's ShaMaran
Petroleum Corp (SNM.V) 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)
have ignored warnings from Baghdad and piled into the oil-rich
region.
"Total has been seeking to get into Kurdistan simply because it
sees there tremendous exploration potential, as much as the 30 or
so oil companies which are already there," the person familiar with
the matter said.
Following Total's entry into Kurdistan in July, 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.
The French oil company 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.
"After all, Exxon has been threatened, but nothing happened so
far," the person said.
Also, Total hopes the recent resumption of oil exports from
Kurdistan, in a concession to Baghdad, will ease tensions, 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 Geraldine Amiel at geraldine.amiel@dowjones.com
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