Total Buys New Oil Interest in Iraq's Kurdistan

Total SA (TOT) has bought the majority stake in an oil exploration block in Kurdistan , in a move that will further consolidate its position in the semiautonomous region of northern Iraq and once again challenge the Iraqi federal authorities.

Total will acquire 80% of the Baranan block, while the remaining 20% will be owned by the Kurdistan Regional Government, or KRG.

"This participation in an operated exploration block was contemplated at the time Total made its move in Kurdistan during the summer 2012," Total said in a statement emailed to The Wall Street Journal." It was indeed the initial intent from that time that Total should contribute its technical expertise and operational knowhow through an active operator role," it said.

In June last year the French oil company announced the acquisition of a 35% interest in Harir and Safen oil expoloration blocks in Kurdistan, an area that oil majors such as Total, Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) view as providing lucrative production-sharing deals and better operating conditions than in the south.

That move angered the central government in Baghdad , which argues it alone has the right to sign and control hydrocarbon deals with international oil companies.

Baghdad has repeatedly warned Total, which has stakes in Halfaya oil field in southern Iraq , that they have to choose between their deals in Kurdistan and central and southern Iraq . So far Baghdad has only barred these companies from future contracts in central and southern Iraq .

Chevron on Monday said it had completed a deal to acquire a new oil exploration block in Iraq 's Kurdistan region. Unlike Total and Exxon Mobil, Chevron doesn't have stakes in central and southern Iraq .