World Bulletin/News Desk
Royal Dutch Shell is exploring possibilities in Iraqi Kurdistan, sources said, having seen rivals Exxon Mobil and Total risk Baghdad's wrath by moving into the autonomous northern region while developing major oilfields in the south.
Shell has come close to securing contracts with the region twice before but pulled back so as not to antagonise the central government in Baghdad, which regards all deals signed by the Kurdistan Regional Government (KRG) as illegal.
Any decision by Shell to follow Exxon, Gazprom and Total into the fast-growing oil province would be bound to irritate Baghdad. Even so, while the moves have displeased the central government, it has yet to kick them out of their projects.
"Shell is in conversation with the KRG," a source with knowledge of the matter, who asked not to be identified, said on Friday. "It could eventually lead to something material in Kurdistan."
The Anglo-Dutch major is already at work in Iraq's supergiant southern oilfields of Majnoon, where it is the operator, and West Qurna-1, where it's Exxon's junior partner. The company is also in a $17 billion gas joint venture with Iraq.
A Shell spokesman declined comment on talks about Kurdistan.
"Over time, we want to work in all of Iraq, but for the time being we've got three mega-projects on the go ... we're already one of the biggest oil and gas investors in country, so that's a big vote of confidence for where Iraq's going," spokesman Jonathan French said.
"We will, however, always be looking for new opportunities and projects where we can add value to Iraq."
Shell has always wanted a presence throughout Iraq and has long had its eye on Kurdistan, first considering involvement in 2007. A second attempt was made just a year ago with Exxon.
Kurdistan's proven reserves of 45 billion barrels amount to more than a third of the national total of 143 billion recorded in BP's annual statistical review, where Iraq accounts for 8.7 percent of the world's known oil.
But Shell did not want to find itself caught, as Exxon is now, in the middle of political infighting between Baghdad and Arbil, the seat of Kurdistan's government, said a source close to the company.
Oil and land rights have been at the centre of a long-running dispute between Kurdistan and Iraq's central government. Last week, the KRG reached a deal with Baghdad to end a dispute over oil payments.
But that agreement will resolve only part of the broader tension between the centre and the region.
Last October, Shell had planned to move into Kurdistan with Exxon but withdrew at the 11th hour to ensure its gas joint venture got the final go-ahead from Baghdad, industry sources say.
Senior executives at Shell were divided over whether that was the right decision, said a source familiar with the company.
Since Exxon's move, Chevron, Total and Gazprom have taken up acreage, leaving little left to secure. Statoil and ConocoPhillips are also circling, according to industry sources.
In the year since Exxon made its bold northern play, Shell - like other companies involved in southern Iraq - has waited to see how Baghdad would retaliate. So far, the U.S. major has gone largely unpunished.
Part of Exxon's motivation for taking on Kurdish exploration blocks may have been the better terms on offer there. Margins on Iraq's southern projects are slim by comparison, say industry sources. They said that may also be driving Shell's discussions, however preliminary these may be.
Sources in Arbil say Shell has tried the patience of Kurdish Prime Minister Nechirvan Barzani and Energy Minister Ashti Hawrami by twice walking away.
While Baghdad has barred companies involved in Kurdistan from doing any further business with the central government, the KRG energy minister said, however, that the region does not have a "blacklist".
"Our criteria are capability and seriousness of intention to invest," Hawrami told Reuters on Tuesday.
Volatility eased as traders focused on the world economy and corporate earnings after a week dominated by the dramatic spike in tensions over North Korea, which triggered a global sell-off before prices bounced back Monday.
Investors greeted the more conciliatory tone after US stocks dropped three days in a row last week on President Donald Trump's vow of "fire and fury" if North Korea continued to pursue its nuclear weapons and ballistic missile programs.
The ultra-conservative kingdom has moved to diversify its traditionally oil-dependent economy following a sharp fall in crude prices.
In its monthly report on the global oil market, the International Energy Agency said, however, that it believes the supply glut is easing, partly because demand is growing faster.
US stocks have been in retreat since President Donald Trump Tuesday issued a fiery warning to North Korea to halt its nuclear program.
The move by one of Japan's best-known firms greatly reduces the chance of an embarrassing delisting from the Tokyo Stock Exchange (TSE).
London's benchmark FTSE 100 index weakened by 0.5 percent to 7,503.39 points.
The approval by the European Commission comes just over two months after the European Central Bank -- which took on the role of the eurozone's banking supervisor in 2014 -- allowed the sale to go ahead for a symbolic fee of one euro.
BP, Chevron, ExxonMobil, Shell and Total have all published results in recent days, showing they pocketed $23 billion in net profit in the first half fo the year.
Higher cereal, sugar and dairy prices pushed food price index by 10.2 percent annually in July
HSBC was also a big riser, gaining three percent at £7.65 ($10, 8.5 euros) in late morning trade after the British banking giant announced a share buyback plan alongside a rise in first-half profits.
Both main crude contracts made strong gains, with WTI testing $50 a barrel for the first time since late May and Brent heading towards $53, while mining giants BHP Billiton and Rio Tinto saw their share price rise as commodities strengthened.