Iraq's West Qurna Oilfield
A worker adjusts the valve of an oil pipe in the West Qurna oil field in Iraq on Nov. 28, 2010. Reuters

After months of speculation and threats against Exxon Mobil Corp. (NYSE: XOM), Iraqi officials announced Friday that the largest U.S. oil-and-gas company has frozen its deal with Kurdistan.

Abdul Kareem Luaibi, Iraq's oil minister, told Reuters he received a letter from the company 11 days ago, saying the company was no longer pursuing its exploration deal in Iraq's semiautonomous northern region.

Exxon Mobil, based in Irving, Texas, declined to comment.

Last November, Kurdish officials announced they reached a deal with Exxon Mobil for the exploration of oil and gas. On Feb. 27, after months of silence, Exxon Mobil confirmed a deal was struck with Kurdistan.

But the Iraqi central government, which is at odds with Kurdistan over mineral rights and revenue partitions, does not recognize exploration contracts that are made without the consent of the capital. Baghdad viewed Exxon Mobil's Kurdish contract as illegal and threatened to oust the company from its supermassive West Qurna Phase 1 oil field, which Exxon Mobil and Royal Dutch Shell (NYSE: RDS.A) are developing in a joint venture.

Iraqi officials previously removed Exxon Mobil from the country's latest lease sale. It's unclear if Baghdad's decision will be reversed following the company's announcement.

But maybe in a few days Baghdad could change its position, if Exxon Mobil gave more clarification of its decision, Luaibi told Reuters.

In Friday trading, the company's stock closed up 35 cents at $86.44.

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