The deputy prime minister in charge of Iraq's oil industry said Sunday the contract, the first deal struck with Kurdish officials by a major oil company, was signed before rules were established on dividing up oil revenues.
Hussein al-Shahristani said in a written statement Baghdad had warned Exxon Mobil not to pursue deals in Kurdistan while the legal framework was still under construction.
The New York Times said the rulebook on oil in Iraq is still under development. Iraq's Constitution allows regional officials to sign production contracts; however, the laws on how those contracts are worded have yet to be settled.
Exxon Mobil declined comment on the dispute, but industry analysts told the Times the company apparently decided to get a foot in the door while betting the Baghdad government will eventually allow the deal to stand.
Smaller oil companies have signed production deals with the Kurds, but Exxon Mobil is the first big company to do so. Kurdish officials announced this weekend the Texas company last month was awarded six exploration blocks in the region.