Chevron looks to Erbil and keeps an eye to south

ERBIL // Chevron, the latest oil major to enter Kurdistan, is seeking to expand its presence in the autonomous region and has not given up on winning oil and gas contracts in Iraq's south.

"We continue to look at opportunities in Kurdistan that might meet our overall portfolio and our aspiration to build a legacy portfolio," said Donald McDonald, Chevron's president for its Iraqi operations.

"When we talk about legacy, we're looking to be here for the long haul, the next 40, 50, 60 years."

Chevron followed ExxonMobil and Total into Kurdistan this year, with contracts to explore two blocks in the region.

It was subsequently blacklisted from bidding at licensing rounds by the central government, which considers oil deals with the Kurdish Regional Government (KRG) to be illegal.

The company does not produce oil in Iraq, in contrast to Exxon, which is now selling its stake in the West Qurna-1 oilfield near Basra because of pressure from Baghdad.

In spite of the federal government's hard line on companies active in the KRG, Mr McDonald said he believed that Chevron's presence in the region did not preclude it from pumping oil in the south in future.

"We continue to look at any opportunities throughout Iraq," he said, while admitting that doing business with Baghdad would not be plain sailing.

"We've built a very good relationship with the central government. Our move here obviously had some impact on that relationship."

Producers of Kurdish oil receive only minimal payment from the central government at present, and companies were cheered by a US$540 million (Dh1.98 billion) payout that was distributed among them on Sunday.

Mr McDonald is optimistic that the dispute between Erbil and Baghdad will be resolved by the time Chevron's fields start yielding oil.

"We're in the early stage of exploration. In three to five years' time, our expectation is that all of this will be behind us. In terms of payment, and in terms of exports," he said.