French oil giant Total says it has acquired an interest in two oil exploration areas in Iraq's Kurdish north from Marathon Oil Corp, joining US oil majors Exxon Mobil and Chevron in the self-rule region.
The deal threatens to worsen tensions between the Kurds and Iraqi authorities in Baghdad, who insist the country's energy resources should be managed on a national level.
Total and Houston-based Marathon said the deal will give the French company a 35 per cent stake in the Harir and Safen blocks, which are located northeast of the regional capital Irbil. They cover areas of 705 and 424 square kilometres respectively.
Marathon will cut its interest in the blocks to 45 per cent as part of the deal. Total will operate the Safen block, and the Kurdish regional government will continue to have a 20 per cent stake in the exploration zones, Marathon said.
"Total confirms its commitment to contribute to the development of the oil Industry in Iraq and is looking for new opportunities," the company said in a brief statement confirming the deal.
Financial terms were not disclosed.
Iraq's Arab-led central government in Baghdad does not approve of energy companies signing unilateral exploration deals with the Kurds.
Baghdad wants to manage Iraq's energy resources nationwide, but the Kurds say the constitution does not require them to go through Baghdad.
Since the 2003 US-led invasion, the Kurds have signed over 50 relatively small oil deals, mostly with small and mid-sized oil companies.
Officials in Baghdad last week blacklisted Chevron from signing future oil deals in non-Kurdish regions after it inked an exploration agreement with the Kurds.
Exxon, meanwhile, drew Baghdad's ire in October when it signed deals with the Kurds to search for oil in six sites, including some that cover areas located in land claimed by both Kurds and Arabs.
Since 2008, Iraq's central government has awarded 15 oil and gas deals to international energy companies, the first major investments in the country's energy industry in more than three decades.
The original goal was to boost daily production from about three million barrels now to 12 million barrels by 2017. That may be revised downward to fewer than 10 million barrels, however, given infrastructure bottlenecks and a possible drop in international demand.
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