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Exxon's Iraq Strategy: Is a Bird in the Hand Worth More than Two in the Bush?

Rex Tillerson, CEO of ExxonMobil recently met separately with Iraqi Prime Minister Nuri al-Maliki and Kurdistan Regional Government Prime Minister Masoud Barzani to discuss the company's provocative stance within Iraq's critical oil and gas sector. Exxon is simultaneously famous for its "my way or the highway" approach and for shying away from the internal politics of sovereign nations where it operates, so these high-profile meetings create many questions about the future of Iraq's oil and gas development framework.

The disagreement and distrust between Baghdad and the KRG has gone on since the former regime fell in 2003, with the two sides unable to reach an agreement on oil revenue sharing, contractual terms with foreign oil companies, export routes and other issues.

Most of Iraq's developed fields and export infrastructure is located in the south, but the Kurdish regional area in the north contains considerable undeveloped reserves and its border with Turkey offers additional export routes to European and western markets.

Baghdad has barred companies that sign contracts with the KRG from operating in the south, but ExxonMobil - having already established itself in one of the most prolific southern fields, West Qurna-1 - also signed production sharing contacts with the KRG in 2011. This infuriated the central government and Oil Ministry who barred Exxon from future licensing rounds and demanded the company sell its West Qurna-1 stake. Exxon has reportedly spoken to potential buyers.