Chevron Returns to Iraqi Kurdistan's Oil Fields

By Benoit Faucon Features Dow Jones Newswires

Chevron Corp. is resuming drilling operations in Iraqi Kurdistan and taking steps to send staff there again, the company said Tuesday, a sign that tensions between Baghdad and the Kurdistan Regional Government are easing.

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Chevron temporarily halted drilling in Iraqi Kurdistan in October after Iraqi forces moved into Kirkuk, routing Kurdish forces who had effectively annexed the city and its oil fields, which lie outside the semiautonomous region's formal boundary. The move by the Iraqi government came after the Kurds held a referendum on independence from Baghdad, including Kirkuk and other disputed territories they seized during the war against Islamic State.

Hostilities have begun to ease, though there are still political tensions.

An official delegation from Baghdad visited the Kurdish region this week for the first time since the referendum and met with officials there including the heads of its two international airports. But Kurdistan's ruling party has said it will boycott May elections in disputed areas retaken by Iraqi forces.

A Chevron spokeswoman said the company would restart drilling operations on an Iraqi Kurdistan block "in the near future."

"We are taking all necessary steps to remobilize people and equipment to ensure we are well prepared to resume operations" in the region, she said.

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Chevron has held the rights to drill several blocks in areas controlled by the Kurdistan Regional Government since 2012. The company made agreements with the regional authorities over the objections of Baghdad, which has sought to control Kurdish oil drilling and shipping.

The Kurdistan Regional Government didn't respond to a request for comment. An Iraqi oil ministry spokesman said he had no information on the resumption of Chevron's operations.

Iraqi Kurdistan has been hailed as one of the oil industry's last great frontiers, though there is dispute about the size of its reserves. The region has carved out a significant amount of autonomy since Saddam Hussein's ouster in the second Iraq war, with its government striking deals with Chevron, Exxon Mobil Corp. and Russia's state oil firm, OAO Rosneft, over the objections of Baghdad.

The loss of Kirkuk has been difficult for the Kurdistan Regional Government. Kirkuk's oil accounted for almost half the crude output from Kurdish-controlled areas. Kirkuk had been held by the Kurds since 2014, when Islamic State's advances caused Iraqi forces to flee.

Isabel Coles in Baghdad contributed to this article.

Write to Benoit Faucon at benoit.faucon@wsj.com

(END) Dow Jones Newswires

January 16, 2018 08:34 ET (13:34 GMT)