From the International Report delivered to the CPGB-ML’s central committee on 3 December
The Iraqi government, which depends on Iraq’s plentiful oil reserves for much of its income, is putting its foot down over the question of oil companies signing deals with the ‘Kurdistan Regional Government’. This applies in particular to Exxon, which has interests in oil fields in southern Iraq as well as seeking to expand into Kurdistan (where 40 percent of Iraq’s proven reserves are situated).
The Iraqi government takes the views that such deals are illegal until rules can be worked out as to how oil revenues should be divided among Iraq’s various regions. It would be possible for Exxon’s interests in the south of the country to be repudiated in retaliation for moves to sign unauthorised deals in the north, although it is thought the Iraqi government is too dependent on Exxon’s knowhow in its aim of increasing production for it to be able to risk alienating it.
Be that as it may, only a few days later Shell found it politic to pull out of oil development talks with the Kurdistan regional government so as not to risk its lucrative investments in southern Iraq, including a potential $17bn natural gas deal.