http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

Balerboy here's a post from dalesman which should answer your question?


Having had the privilege to see The Perpetual Optimist develop his work over many months and watch as paradigms were challenged and the complexities of the contracts were unraveled I can say that in my opinion, TPOs work on this epic task, has been outstanding. I suspect that Exxon. Chevron or Sinopec, or even GKP have not developed such a precise analytical tool to value Shaikan.

The Spidy calculator is an excellent tool but it is a broad brush, lacking the precision that an accurate NPV / DCF analysis can give to any valuation.

I now include such a calculation in my own spreadsheets but they too are simplified in comparison to TPOs work on the contracts.

TPOs calculations are anything but simple. They are complex and in my view robust having been subjected to 11 iterations and improvements. I am confident that TPOs figures can be used with confidence when assessing what Shaikan would be worth to a predator.

In coming to an headline figure some assumptions have to be made in constructing a financial model. In TPOs case they are:


1. Extracted barrels / OIP

The number of barrels extracted over the time of the contract has been the subject of intense discussion. TPO has used the words of our esteemed CEO and COO to come to a reasonable figure. If you work his figures back to the OIP needed to achieve his 4.5b extracted, a figure of 15b barrels is required.

This figure has not yet been achieved but given that GKP has already declared 13.2bbls of P10, with, SH4, SH5, SH6 and possibly SH7 results still to add to the total knowledge of the Shaikan intervals it is likely that 15b 2P reserves will eventually turn out to be conservative! Mirabaud is already saying that the full to spill scenario is likely.

2. The recovery factor.

The recovery factor is another key variable that TPO has had to wrestle with. Here we have a wide range of figures available. Tawke with similar oil to Shaikan started off with an 18% RF. The most recent figure has been set at 34%.

Tony Hayward in his presentation to analysts said that a 50% RF would ultimately be possible. GKP COO, John Gerstenlauer has a mentioned a range of values. Recently John has said that somewhere between 25-30% is feasible, however in the presentation to the Erbil conference he has penciled in 33% see page 6.

TPO has used 30% somewhat above Gramachos 25% but considerably less than Tony Haywards ultimate recovery factor. It will IMHO, depend on the balance of production sourced from the Triassic and the Jurassic, along with the effectiveness of Enhanced Recovery Methods applied to extracting oil from Shaikans reservoirs. The Jurassic has a higher GOR and it has a higher API. The recovery factor from the Triassic will be higher than the lower API Jurassic oil.

Given that the range of values available relating to the RF is large- between 18 and 50% - and that enhanced recovery methods will be applied to the Shaikan stacked reservoirs, his decision to use 30% is a well-reasoned value. It has certainly been the subject of intense discussion.


3. The Oil Price Assumption. Another key variable!

Here IMHO, TPO has been ultra conservative, using a $100 long term oil price assumption. Goldman Sachs has raised the specter that the POO could raise to $180 within three years. My own opinion is more conservative than GS but is higher than that applied by TPO. Changing this variable, materially influences the final outcome. In my opinion a predators long-term price assumption will be nearer to Goldman Sachs than TPO, given we are looking across a 30-year timescale. For each additional 10 rise in the price of oil, the return achieved by an operator is likely to increase dramatically. Im sure TPO could supply us with a range of values.

4. The contract.

The complexity of the KRG contract has been unraveled by TPO. The minutiae involved in calculating the transition period between cost and profit oil has been painstakingly unraveled. His application of the fabled R factor is masterful Im not qualified to interpret the complexities of the calculations used but I do know that he has gone to extraordinary lengths to get it right.

So we return to what Scaramouche has correctly identified as the key output figure.

Its taken me a long time to become convinced that the $5.11 that I am currently using in my NAVs may need some upward revision. PTO.s $7.80 headline figure is IMHO a verifiable figures, a benchmark figure, a conservative figure, that we can use to value, the company.

Using my own NAVs , which include fully discounted calculations I get a very similar figure to The Perpetual Optimists, with 6.22 for Shaikan and 8.28 for all blocks using figures already published.

If I up the OIP to 15b and use similar assumptions to TPO I get 8.73 for Shaikan and 10.79 for the company.

HOWEVER if I use TPOs $7.80 I get 10.03 for Shaikan and 12.36 for all blocks.. As you can see we arent a million miles apart and given what I know about the accuracy of TPOs figures I believe his slightly higher figures are accurate and near the bullseye!

Kind regards

Dalesmann.

Mikey on iii

Re: Todays RNS
GKP.L

8 zones tested, aggregated 18,900 bopd
Jurassic test 22nd March, 8,064 bopd
Kurrie Chine B test 5th Sept 2,600 bopd

I make it that SH-2 has a total aggregated production from all zones of 29,564 bopd

By Hassan Hafidh

Of DOW JONES NEWSWIRES


BAGHDAD (Dow Jones)--Iraq is expected to sign Saturday an agreement with four international oil companies to build a multi-billion-dollar oil field water injection plant, a senior Iraqi oil official said Monday.

Abdul Mahdy al-Ameedi, head of the Oil Ministry's Petroleum Contracts and Licensing Directorate, said U.K. super major BP PLC (BP), U.S. giant Exxon Mobil Corp. (XOM), Italy's Eni SpA (E) and Russia's OAO Lukoil Holdings (LKOH.RS) have agreed to build the first phase of the project, which is designed to produce some 4.2 million barrels a day of seawater to be injected into Iraqi oil fields in order to boost production.

"The development agreement of the project is planned to be signed Nov. 26 in Turkey," Ameedi told Dow Jones Newswires in an exclusive interview in Baghdad.

Ameedi declined to give costs of the project but Iraqi oil officials had previously said that foreign companies had suggested the cost could be more than $3 billion.

Exxon Mobil was picked as operator of the project, Ameedi said.


-By Hassan Hafidh, Dow Jones Newswires; +962 799 831 831; hassan.hafidh@dowjones.com


(END) Dow Jones Newswires

And of oui Algerian assets.

http://translate.google.com/translate?u=http%3A//www.tsa-algerie.com/economie-et-business/british-gas-quitte-l-algerie_18260.html&hl=en&langpair=auto|en&tbb=1&ie=UTF-8

dition.cnn.com/video/#/video/business/2011/11/18/marketplace-middle-east-kurdistan-iraq-oil.cnn?iref=allsearch

ideo.ft.com/v/1287915920001/Oil-majors-could-follow-Exxon-into-Kurdistan

Rudaw: Bickering Over Oil and Gas Law Hurts Foreign InvestmentPosted: November 22, 2011 in Iraqi Dinar/Politics
ERBIL, Iraqi Kurdistan Energy experts say that foreign investors are concerned about the bickering over Iraqs oil and gas law and may be reluctant to invest in the countrys vast natural resources until legislation is passed.

For years, Baghdad and the Kurdistan Region have disagreed on the details of Iraqs oil and gas law including whether regions can strike deals for natural gas projects.

The Kurdistan Region has its own investment law and the central government still works under laws from Saddam Husseins era.
A new row between Baghdad and Erbil started last week following reports that the Kurdish authorities had signed a contract with the American oil giant ExxonMobil, which already has an existing contract with Baghdad.

Jonathan Brown, Kurdistans project manager for the Canadian oil company Talisman Energy, which currently works in three different oil fields in Kurdistan, said the lack of clarity regarding Iraqs oil and gas laws will hinder foreign investment in the region and Iraq.

Its a big problem; any company that wants come to Kurdistan or Iraq, the first thing they talk about is the law issue, he said.

Todd F. Kozel, chairman and CEO of the British oil firm Gulf Keystone Petroleum Co., maintained that oil-related conflicts between Baghdad and Erbil will hurt the industrys development but remains hopeful that the issues will be resolved.

Our company has invested millions of dollars in its projects in the Kurdistan region and I believe that KRG and central government will solve the issue, or we would not have invested a lot of money in the region, he said.

There were reports late last month that Iraqi Prime Minster Nuri al-Maliki and Kurdistan Regional Government (KRG) Prime Minster Barham Salih agreed to amend Iraqs 2007 oil and gas law by December 31.
That law was approved by most of Iraqs political factions.

In August, Kurdish officials were upset when Iraqs cabinet hastily passed a new draft of Iraqs oil and gas law without consulting the Kurds. A previous draft of the law had sat in Parliament since 2007.

Kurdish leaders accused Iraqs prime minister of becoming authoritarian and creating an economic dictatorship.

Natt Arian, a Kurdish investor based in Australia, believes that foreign investors have the right to be concerned about Iraqs oil and gas law because it needs to protect their business. Arian also said the KRG should do more to attract foreign investment.

Kurdistan should do more to expose the region to foreigners and give them more information about the situation, he said. For example, Australians havent got a lot of information about Kurdistan.

Thank you cyril.

http://www.google.com/hostednews/afp/article/ALeqM5i42TJcw68Y8tFr5oN4juFfrtTGfA?docId=CNG.d0e0071962fb3e6dd7f4c30ba30ff803.301

http://www.rttnews.com/Content/GeneralNews.aspx?Node=B1&Id=1767214

RTTNews) - The United States has urged Iraq to draft a revenue sharing agreement to enable foreign energy firms to invest in the national energy sector in a legally viable and sustainable way.

The call was made by U.S. State Department spokesperson Victoria Nuland at a routine press briefing on Tuesday.

When a reporter sought the U.S. government's response on Exxon Mobil Corp. (XOM: News )'s oil deal with the Kurdish regions of Iraq, Nuland replied that "the United States has advised all of our companies, including ExxonMobil, that want to invest in the Iraqi security sector that they run significant political and legal risks if they sign contracts with any parties in Iraq before there has been a national agreement to work out the complex issues having to do with oil revenue distribution within Iraq."

She noted that "for many years, the United States has been urging all parties in Iraq to enact the necessary national laws that can govern the oil and gas sector because the sooner they do that, the sooner companies can invest in a legally viable way."

She said the U.S. government had advised the country's energy giant to wait for national legislation before signing any deal with the Iraqi oil sector.

When the threat of an Iraqi sanction on Exxon was brought to her notice, the spokesperson said that "our message to the Iraqi government and to all the parties involved in the crafting of national legislation (on a revenue sharing agreement) is that this is overdue, that it is in Iraq's interest to get this done so that companies like Exxon can invest in a way that is legally viable and sustainable."

.... etc ....

General Electric Co. has opened its first three offices in Iraq, extending the conglomerate's involvement in infrastructure projects in the war-torn nation.

The new offices are located in Baghdad, in southern oil-and-gas hub Basra and in Erbil, which is located in the Kurdish region in the north.

"Iraq's economy holds enormous potential, but a sustained growth will require fixing the country's battered infrastructure as well as investing heavily in the industrial and government sector," the company said Monday.

The move comes as U.S. military involvement is winding down. President Barack Obama in October announced he would bring all U.S. forces home from Iraq by the new year, ending a war that stretched nearly nine years.

While the first of their kind, GE's office openings in Iraq follow more than 40 years of company involvement in the country. In its release Monday, GE cited a host of its products playing a role in the nation's infrastructure projects.

The company said more than 130 of its gas turbines feed Iraq's power grid, helping to limit the impact of chronic electricity shortages. In another instance, GE said refineries, petrochemical plants, and municipalities in the country are using the company's advanced waste-water treatment plants.

GE said it plans to recruit more than 200 Iraqi nationals.

"We will support the country's economic diversification and partner in infrastructure development through public and private partnerships," said GE Vice Chairman John Rice.

The company has lately been working to refocus on its industrial roots, plans that have seen the conglomerate undertake a spate of acquisitions aimed at expanding its energy infrastructure business.

US Position On Iraq Oil Deals Misrepresented
23/11/2011 By HAWAR ABDULRAZAQ ALI

ERBIL, Iraqi Kurdistan -- The US State Departments position on oil exploration contracts signed with Iraq have been misunderstood and misrepresented, analysts said yesterday after it was claimed that the US had warned its oil companies about signing deals with the Kurdistan Region.

In fact the US state department position on US oil companies signing contracts in Iraq has not changed and was repeated yesterday by spokeswoman Victoria Nuland.

She said US companies had been advised as a general principle about the risks of signing deals with any parties in Iraq until a new federal hydrocarbon law and revenue sharing law is in place.

"The United States has advised all of our companies, including ExxonMobil... that they run significant political and legal risks if they sign contracts with any parties in Iraq before there has been a national agreement," on how to distribute oil revenue, Ms Nuland said yesterday.

ExxonMobil, which has business in the south of Iraq, recently signed a deal with the KRG to explore for oil in 6 areas, prompting a furious reaction from the oil ministry in Baghdad.

According to a senior industry analyst, who spoke to Rudaw on the basis of anonymity, the phrase any parties in Iraq was deliberately crafted by US officials to avoid the singling out of the KRG and also to cover the signing of deals with the federal government.

Headlines such as todays AFP story US warns of risks in Iraqi Kurdistan oil deals are misleading and misrepresent what the state department actually said, the analyst said.

In London for a conference on Iraq on Tuesday, Deputy Prime Minister of Hussein al Shahristani said Baghdad was considering imposing sanctions on Exxon Mobil after its decision to sign a deal with the KRG.

But a few eyebrows were raised when he claimed that the US government supported his position. "The Iraqi government is considering sanctions, and will inform the company before they make a public announcement," he said, adding the United States government had been unaware that Exxon had been in negotiations with the Kurdish authorities.

"The position of the US government has been that they were unaware of it and if they had been asked, they would have obliged (Exxon) to get approval of the Iraqi government." Sharistani was quoted as saying.

Critics wondered why Shahristani would choose to speak on behalf of the Americans.

He is a self-appointed energy supremo for Iraq, now he is a self-appointed spokesman for the US, said the Iraqi oil analyst.

However, the state department spokeswoman said that US policy on all Iraq oil deals was consistent.

"For many years, in fact, the United States has been urging all parties in Iraq to enact the necessary national laws that can govern the oil and gas sector," Nuland said. "The sooner they do that, the sooner companies can -- can invest in a legally viable way."

This was a repetition of the stance taken on November 14 by another State Department spokeswoman Nicole Thompson.

She said: It is in the interests of all Iraqi parties to enact a set of national laws to govern the oil and gas industry and to develop a revenue-sharing system thats equitable. One those laws are approved they would provide a strong, modern legal basis for Iraqs hydrocarbon sector and it would allow Iraq to develop its substantial resources for the benefit of all Iraqis.

Some officials in the federal government, including Shahristani, have claimed that the Exxon deal with the KRG is in breach of Iraqi laws.

But in the absence of a federal hydrocarbon law, it is not clear which laws Erbils opponents are talking about.

Shahristanis advisors often appear to refer back to the laws of the Saddam era.

However, Article 13 of Iraqs new permanent Constitution renders such legislation void.

The Constitution, which proclaims its own supremacy, provides:

"First: This Constitution is the preeminent and supreme law in Iraq and shall be binding in all parts of Iraq without exception.

Second: No law that contradicts this Constitution shall be enacted. Any text in any regional constitutions or any other legal text that contradicts this Constitution shall be considered void."

The deals with Exxon were signed under Kurdistans Oil and Gas Law which was passed by the Kurdistan Regional parliament in 2007. That parliament and the Region is recognized in Iraqs permanent federal constitution. Oil and gas are not listed as one of the exclusive powers of the federal government, and regional laws have supremacy whenever there is a clash with federal laws.

Said the oil analyst: It is ironic given the mood for decentralization sweeping the region that some in Baghdad appear to want to go back to centralized control. They dont realize that the age of the dinosaurs is over.

Time Guy's Time

Excellent Opportunities, but the Door is Closing
Posted on 24 November 2011.

The ExxonMobil controversy has dominated the business headlines in Iraq over the past week, and while it is very significant and politically sensitive situation, we should not allow it to distract us from the big picture the accelerating progress in development of the country.
Three quotes from this weeks Iraq: Untapped Opportunities conference in London, and from the newly-launched The New Iraq: 2012 Discovering Business guide, perhaps sum up the situation best:
Dr. Sami Al-Araji, Chairman of the National Investment Commission:
Our Five Year National Development Plan for 2010-2014 targets economic growth of 9.4% per year, with projects worth up to US$186 billion the sky really is the limit for investors.
Philip Kennedy, Managing Director of Eschmann:
If anyone is reluctant to enter the Iraqi market, for us it has been a wonderful transformation and Id encourage companies to take up the challenge.
Robin Ord-Smith, UK Trade and Investments (UKTI) Iraq Director:
There are excellent, excellent opportunities but the window is closing.
Can we be any clearer about it?

nice one nice one :-)))

raq postpones the conclusion of a gas deal with Shell and Mitsubishi, for technical reasons
November 24th, 2011 09:03 am Posted in NEWS (Iraq & World Currency)

Baghdad, November 24 (Rn) The Iraqi Oil Ministry, the postponement of a final contract with Shell and Mitsubishi, to collect the associated gas from southern oil fields worth about $ 17 billion.

And was scheduled to conclude a contract on Thursday but was postponed to next Sunday, the ministry said that the delay was due to technical obstacles.

He said the ministry spokesman Assem Jihad told the Kurdish news agency (Rn) that the South Gas Company signed Sunday a contract with a consortium of Shell and Mitsubishi Gas Company to establish a Basra.

Jihad said that technical obstacles concerning the entry of representatives of companies to Iraq and delayed visa (visa) led to the postponement of the conclusion of the contract to the next Sunday.

The Iraqi government announced on 16 this month, it agreed to the contract signed by the initials in the June 12 last with Shell and Mitsubishi, to collect the associated gas from southern oil fields.

The agreement will help the development of which has a term of 25 years to collect more than 700 million cubic feet per day of gas currently being burned in three southern fields as Rumaila, Zubair, West Qurna.

Under the contract will be a joint venture, named Basra Gas Company at the forefront of Iraqs plans to modernize power plants and promote exports of oil, the Iraqi government will own 51 percent of the project compared to 44 per cent of Shell and the rest of the Mitsubishi.

Indicates a summary of the formal agreement published by the Reuters to the unit to export liquefied natural gas worth $ 4.4 billion in addition to $ 12.8 billion is the estimated cost of rehabilitation of gas facilities, existing and building new facilities, but does not mention the potential date for the construction of LNG facility.

Shell and Mitsubishi consortium is expected to be the internal rate of return on the project 15 percent on an initial investment of $ 6.98 billion, while the South Gas Company plans to pump $ 3.7 billion of public money in the beginning and the financing of investment from the sales of the remaining gas.

The project has faced legal obstacles and political opposition since the initial agreement reached in 2008.

Iraq and lose billion cubic feet of gas per day and burning mostly in the south. And intends to use the gas production is a joint venture with Shell in the local market to meet the growing demand for electricity has issued surplus.


http://bit.ly/tr84mw


---------------------------------------------------



Iraq's Basrah provincial council in legal challenge to Shell gas deal
Basrah, Iraq (Platts)--24Nov2011/634 am EST/1134 GMT

The provincial council of Basrah in southern Iraq has decided to mount a legal challenge against a multi-billion gas deal between the central government and Shell, saying the project does not guarantee enough benefits for the province, officials said Thursday.

The Basrah Gas Company, a joint venture between Shell, Japan's Mitsubishi and the state-run South Gas Company, will be formalized on Sunday, when a final agreement is signed at the Oil Ministry in Baghdad.

"This lawsuit claim is a constitutional right because of the risks to Basrah," said council member Farid Khalid, who is also head of the energy committee. "We ought to get some concessions from the two companies such as health services and social development projects and others."
Local officials have argued that they have not been included in key talks about the project, which will gather and utilize natural gas that is produced in association with southern oil fields and is otherwise flared.

The Iraqi constitution "makes the province a partner in charge of oil policy," said deputy provincial council chairman Ahmed Sulaiti.

The project, which Iraqi officials say carries a $17 billion price tag, will process 2 Bcf/d of associated gas produced from southern oil fields and supply the domestic market. Any surplus gas will be exported in the form of LNG.

The South Gas Co. will have 51% in the consortium, Shell 44% and Mitsubishi 5%.

The newly formed company would be tasked with capturing associated gas currently flared at the Rumaila, Zubair and West Qurna 1 oil fields, currently totaling 700,000 Mcf/d but rising as incremental oil is produced from the fields being developed by consortia led by BP, ExxonMobil an Italy's Eni.

The legal challenge is the latest snag to hit the gas project since the heads of agreement was signed with Shell in September 2008 -- Mitsubishi joined the project later. Some Iraqi politicians have criticized the 25-year agreement because it was negotiated directly with Shell rather than by competitive tender.

In keeping with local investment concessions that foreign oil companies have made as part of their oil field development work, the provincial council wants guarantees of projects such as healthcare, said Farid Khalid, chairman of the Basrah council's energy committee.

"We had a number of proposals for both Shell and Mitsubishi regarding projects for the benefit of Basrah," he said.

It is not clear what the lawsuit will demand and where it will be filed. However, it is unlikely to prevent Sunday's signing.

The move by the Basrah council is the latest example of local councils demanding more authority from Baghdad. Salahaddin province last month voted to start the process to form their own region.

"I support the chairman of the provincial council in this endeavor," said Basrah governor Khalaf Abdul Samad, a member of Prime Minister Nuri al-Maliki's party.

"Raising a complaint against the Oil Ministry is a proper step," he said.

http://plts.co/irgs1124






BiggerThus - 24 Nov'11 - 18:45 - 131913 of 131939

You've gotta laugh. The signing of a 25 year contract to manage gas worth $17 billion that has been under negotiation for years is delayed because the Iraqi government couldn't get visas issued in time for the Shell BOD to attend the signing.
That is BEYOND farce - in fact it's almost criminally incompetent.
Were this to happen in any other country Mr Maliki, heads would roll. I think you know which head I'm referring to in particular, and it isn't your current Oil Minister.

He said the ministry spokesman Assem Jihad told the Kurdish news agency (Rn) that the South Gas Company signed Sunday a contract with a consortium of Shell and Mitsubishi Gas Company to establish a Basra.

Jihad said that technical obstacles concerning the entry of representatives of companies to Iraq and delayed visa (visa) led to the postponement of the conclusion of the contract to the next Sunday.


Lobo - 24 Nov'11 - 18:53 - 131914 of 131939

I've been out since 9.30 this morning and there are now 444 posts that I haven't read. Has anything significant come to our attention?

tia.

highlander7 - 24 Nov'11 - 18:54 - 131915 of 131939

They are incompetant because they are basically tribal leaders trying to manage a country and are very clearly not up to the job. However they had better learn pretty quickly , especially Mr S , or they will be looking at the an independant Kurdistan.

The Iraqi people are also sick and tired of no water , no electrical power and no jobs so the pressure is on. We need the O&G Law passed but so do they.

Lobo - 24 Nov'11 - 18:55 - 131916 of 131939

I see Spencer thinks the Shaikan birs are sold to Exxon, anything to back this up?

BiggerThus - 24 Nov'11 - 18:56 - 131917 of 131939

Lobo, just the alphatwats mentioning a 3 bid in the pipeline from Exxon for something or other related to GKP ... obviously not clear yet exactly what, or if they're just winding us up.

DFGO - 24 Nov'11 - 18:56 - 131918 of 131939

Analysis: Exxon Kurdistan foray tests Iraq's centralist resolve

By Patrick Markey

BAGHDAD | Thu Nov 24, 2011 12:10pm EST

BAGHDAD (Reuters) - Exxon Mobil's venture into Iraqi Kurdistan challenges Prime Minister Nuri al-Maliki's resolve against growing regional separatism and tests the investment strategy of the oil majors in Iraq.

Exxon is the first major oil company to test the waters by signing for six blocs with the Kurdistan Regional Government (KRG) in north Iraq, which is locked in a feud with the Arab-dominated central government over territory and oil rights.

Kurdistan has enjoyed more stability and security than the rest of Iraq, and its potential resources have already drawn smaller oil players like Norway's DNO and Gulf Keystone. But its festering political quarrel with Baghdad has kept majors away until now.

Exxon's foray into Kurdistan has forced a political stand-off between one of the world's largest oil companies and an Iraqi government determined to exercise sovereignty as U.S. troops withdraw eight years after the fall of former leader Saddam Hussein.

Deputy Prime Minister for Energy Hussain al-Shahristani, architect of many of Iraq's deals with foreign companies and a hard-liner against Kurdistan oil autonomy, said on Tuesday the government was considering sanctioning Exxon.

Baghdad had already warned that any deal foreign companies sign with Kurdistan would be deemed illegal, saying Exxon's move could jeopardize its huge contract for the 8.7 billion barrel West Qurna Phase One oilfield in southern Iraq.

But for Maliki, dealing with Exxon is a tricky balance: Taking a hard line could push more deals north and risk souring future investments in major southern fields as the OPEC country tries to rebuild its industry after years of conflict.

Ceding too much to Kurdistan may upset the balance with other regions chafing for more autonomy from Maliki's central government authority and test the frail power-sharing coalition in Baghdad made up of Sunni Muslim, Shi'ite and Kurdish blocks.

"We believe that the government will avoid cancelling the West Qurna agreement but will seek to penalize Exxon Mobil in some way," Eurasia Group's Crispin Hawes said.

"In the longer term, the Exxon Mobil move has put further pressure on the Maliki administration to deal with the question of regional authority and federalism."

At the heart of the Exxon dispute is the question of who controls vast oil reserves in the north of Iraq including territories disputed between Kurdistan and Baghdad -- a potential flashpoint for tensions as U.S. troops pull out.

Iraq sits on the world's third-largest oil reserves and with violence from its conflict now easing, it plans to auction 12 new oil and gas blocks in March that could add another 10 billion barrels to reserves.

Baghdad has already barred Hess Corp. from participating in a new bidding round for assets because of its dealings with Kurdistan.

But taking on a behemoth like Exxon -- well versed in legal tactics such as international arbitration to protect its interests -- would prove far more complex for Maliki and Shahristani.

Exxon is not only involved in West Qurna One, but is also leading a multi-billion-dollar water injection plan that is key to bolstering southern oilfield output -- a project that it may believe will help shield it from major punishment.

The U.S. company could have judged the political fallout was manageable enough to gain a foothold in Kurdistan.

"Exxon seems to have made the calculation that it is too important for Iraq's oil ministry to push them out of their southern projects," Teymur Huseynov, head of Global Energy Consulting at Exclusive Analysis, an intelligence company.

SIMMERING DISPUTE

For Kurdistan, the Exxon deal brings the region more international recognition as a player on the oil market and may seek to give it leverage with the central government over a long-awaited oil law to resolve the dispute.

While the feud means companies in Kurdistan cannot get full export revenue for now, the Kurdistan regional government (KRG) offers attractive production-sharing deals -- allowing companies to make profit from oil sales -- compared with the service contracts in the south.

Exxon itself has not commented on the deal. But already others are waiting on the sidelines, including Royal Dutch Shell, which one source said had planned to sign in Kurdistan

at the same time as Exxon but pulled out a day or two before.

Chevron and Italian explorer Eni had also be in contact with Kurdistan, one Iraqi official said.

"They know the geology is attractive in Kurdistan although geopolitical risk is high, but they know too how to balance that type of risk," said oil analyst Oswald Clint at Bernstein.

Iraqi Deputy Prime Minister Ross Nouri Shawis, a Kurd, said the central and regional governments had been in touch about the Exxon deal before. But any accord between Baghdad and Kurdistan appears to have soured at the last minute as Exxon signed.

Reflecting that fallout, the U.S. State Department said on Tuesday it had warned Exxon about the political and legal risks of signing contracts "without nationwide" approval.

Mixed messages from Baghdad reflect the power struggle within the government. Shahristani, a Shi'ite with strong ties to the south, is unlikely to want to retreat on Exxon. Shawis and others have offered a more conciliatory tone.

The outcome will not only affect Exxon and how other oil investors see Iraq, but also political relations between the two governments as they try to resolve their bitter dispute and sign the national oil law meant to define crude rights.

Agreement over the oil legislation -- seen as essential for investors to guarantee their assets -- has been stymied by competing claims to disputed territories along the internal border between Kurdistan and Iraq.

Some observers see in the Exxon move an attempt to force Baghdad and the KRG in Arbil to hammer out their differences rather than let worsening tensions damage investments. But a solution may be complicated if any of the six Exxon blocks falls inside disputed territorial areas.

Key legislation like Iraq's oil law -- initially agreed by the political parties in 2007 but still not passed -- has been caught up for years in Iraq as factions squabble for power.

Maliki may now find it politically difficult to accept Exxon's move into a semi-autonomous region as the government faces calls for autonomy from places like Salahuddin, where disgruntled Sunnis want more independence.

Autonomy would give a province more power over its finances, administration and laws. Local governments would have an upper hand in supervising public facilities in their territories, which could loosen Baghdad's grip on oil facilities.

"It's now become impossible to dissociate Exxon with Iraqi politics," Jaafar Altaie, managing director of Manar Energy consulting. "If the deal goes sour, critics could say Exxon helped ferment divisions in Iraq. If it goes well, they will say Exxon helped bridge the differences between Arbil and Baghdad

http://arabnews.com/economy/article535050.ece

300p a share for some of GKP's blocks.......... would be nice :)


http://www.thisismoney.co.uk/money/markets/article-2065874/MARKET-REPORT-Dealers-oil-rumour-wheels.html#ixzz1efHgCZfy

..........Revived talk of a bid from Exxon Mobil lifted Gulf Keystone Petroleum 21.75p to 168.5p. Speculation has intensified after Exxon recently announced it was to enter the semi-autonomous region of Kurdistan in which Gulf Keystone operates..........


http://www.ft.com/cms/s/0/1aa5a3ec-16c0-11e1-bc1d-00144feabdc0.html#ixzz1efLJCP8c

.............Fellow explorer Gulf Keystone Petroleum , which focuses on the Kurdistan region of Iraq, jumped 14.8 per cent to 168.38p amid gossip about a potential bid from ExxonMobil. Similar tales have been circulating ever since Exxon earlier this month became the first large oil group to sign a deal with Kurdistans semi-autonomous government.............


http://www.guardian.co.uk/business/marketforceslive/2011/nov/24/heritage-uganda-ruling-ftse-falls

..............Gulf Keystone Petroleum, which has operations in Kurdistan, jumped 21.75p to 168.5p with 12m shares traded on speculative talk of a possible 300p a share offer from Exxon Mobil, which is attempting to set up in the region. Traders were wary of the tale, however....................

indeed - yesterday was enjoyable - today 185+ ??

Prosel Good find on possible takeover? Cheers.

bid rumour in the daily mail and elsewhere this morning too :-))))