Iraq on Sunday gave French energy giant Total an ultimatum to either end its dealings with the autonomous Kurdistan region in the north or to sell its stake in a giant southern oilfield.
Iraq's deputy prime minister responsible for energy affairs, Hussein al-Shahristani, also said Baghdad was considering offering foreign oil firms more lucrative contracts, as he admitted a recent auction of exploration blocks had not been as successful as officials had hoped.
Total "was requested to withdraw from this field, and it has been given a certain period to end this case by selling its share to another company or by ending the contract with Kurdistan," Shahristani told AFP. He did not specify the time by which Total, which said on July 31 that it signed an oil exploration deal with Kurdistan, needed to make a decision.
Kurdish authorities have signed dozens of deals with foreign energy firms on a production-sharing basis, contracts regarded as illegal by Baghdad which insists all such deals must go through the federal oil ministry and prefers per-barrel service fees.
"Total announced that it signed contracts in Kurdistan and, because of that, the ministry of oil told them that they had breached Iraqi law," Shahristani said. "If it ends its contract with Kurdistan, it can proceed with the Halfaya field."