Russia gaining foothold in Iraqi oil

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MOSCOW, Oct. 12 (UPI) -- Baghdad may send a signal to energy companies working in the Kurdish north by sidelining Exxon Mobil from developments in the south, an industry official said.

Iraqi Prime Minister Nouri al-Maliki arrived in Moscow this week to meet with Russian officials. The Iraqi government timed the approval of an exploration contract in southern Iraq between Russia's Lukoil and Japan's Inpex Corp. to coincide with his visit.

Iraq has the fourth-largest oil reserves in the world. A report from the International Energy Agency this week said Iraqi oil production could more than double by 2020 and it could eventually pass Russia as a major oil exporter.

Analysts watching the Iraqi oil sector point to lingering acrimony between Baghdad and the semiautonomous administration in the Kurdish north as reason for concern. Baghdad had said unilateral contracts with the Kurds are illegal.

Baghdad is reportedly considering bringing Lukoil and Gazprom Neft, Gazprom's oil division, into the West Qurna-2 project in southern Iraq in favor of Exxon. News agency RT, citing an industry insider, reports Baghdad is frustrated with Exxon's work in the north and could send a signal with the replacement.

Lukoil didn't reply to RT. Baghdad in April declared a Kurdish deal with U.S. supermajor Exxon frozen because of the legal issue.