Earlier this week, the United States told oil companies not to bypass Iraq’s central government after it turned out that a number of foreign energy companies did deals in the self-ruled Kurdish region.
The state department issued this statement:
“With regard to our own companies, we continue to tell them that signing contracts for oil exploration or production with any region of Iraq without approval from the federal Iraqi authorities exposes them to potential legal risk.”
Translation. . .
We’ve spent more than $3 trillion to wage war here. We spilled our blood and spent our treasure to secure this oil. Don’t think for a second you can go behind our backs. Iraq and all its oil is ours. We call the shots here!
Not surprisingly, Kurdish relations with Baghdad have gone south because of Kurdish deals with ExxonMobil (NYSE:XOM), Gazprom and Chevron (NYSE:CVX). And just today, after the US issued its passive aggressive warning, France’s Total (NYSE:TOT) bought a minority share in an exploration block in the Kurdish region – offering a mighty big manger de la merde to the US.
Of course, there’s more to this story than just bully rhetoric and my attempts at sarcasm. Here’s a quick rundown of what’s really going on here.