The spokesman for the Iraqi energy ministry has said the Exxon Mobil Corp. (NYSE: XOM) will be excluded from the next round of bidding for licenses to produce the country’s oil & gas deposits. Exxon signed a licensing deal with the semi-autonomous government of Kurdistan last year, an agreement that angers the Iraqi government.
The central government of Iraq claims all licensing rights, even in Kurdistan. The Kurds don’t agree, obviously. France’s Total SA (NYSE: TOT) is currently considering signing a licensing deal with Kurdistan, and faces the same treatment as Exxon if it does so. Most licenses in Kurdistan are with wildcat companies willing to risk the ire of Iraq’s government mainly because they can’t compete with the likes of Exxon, Total, BP plc (NYSE: BP), and Royal Dutch Shell plc (NYSE: RDS-A) for the big deals in the south.
The loss, for Exxon, probably doesn’t mean much, because the licensing deals pay only a per-barrel fee in addition to well development costs. The fee is typically less than $2/barrel. Not the kind of profit there that Big Oil is used to.
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