Exxon Mobil Has Days To Explain Kurdish Deal

U.S. oil and natural gas giant Exxon Mobil (NYSE: XOM) has been handed a deadline to explain exploration deals the company struck in Kurdistan last November.

Earlier this week, Iraqi officials in Baghdad made good on prior threats to the company for having negotiated, and acquired, oil and natural gas exploration contracts with the Kurdish regional government, which is at odds with the Iraqi central government. They imposed a deadline for the company to explain the contracts it negotiated with Kurdistan.

Exxon Mobil officials in Houston said they had no comment. The company has a few days left to respond to Baghdad.

The central government considers any contract negotiated without the oil ministry to be illegal, and ever since Kurdish officials announced a deal with ExxonMobil, the central government has suggested Exxon Mobil's holdings in West Qurna, a supermassive oil field, could be at risk.

Last month, Iraqi ministers suggested Exxon Mobil would be excluded from the country's upcoming lease auction. The country wants to auction 12 exploration blocks that may contain an estimated 29 trillion cubic feet of natural gas.

Speaking to Reuters, Faisal Abdullah, a spokesman for Iraq's Deputy Prime Minister for Energy, Hussain al Shahristani, said Exxon asked for more time with which to formulate a reply. The Iraqi government gave the company a deadline that expires in the next few days.

On Feb. 27, Exxon Mobil confirmed it brokered a deal with Kurdistan.

As part of the deal, Exxon Mobil will explore for oil and natural gas in Kurdistan for five years and have the opportunity for two-year extensions. The company also has a 20-year production contract with the option to extend it for five years.

In Friday trading, Exxon Mobil shares fell 53 cents to $84.30.