After months of silence, ExxonMobil executives confirmed the company's exploration deal with the semi-autonomous Kurdish Government in Northern Iraq.
An executive report released Friday said ExxonMobil, the No. 1 U.S. energy company, will explore for oil and natural gas in the region for five years and will have the opportunity for two-year extensions. The company also has a 20-year production contract with the option to extend it for five years, MarketWatch reported.
Shares of Houston-based ExxonMobil rose 11 censt to $87.47 in late morning trading Monday, valuing the company at $414 billion, the second most valuable after Apple's $488 billion.
The Kurdish contract has proved to be contentious for ExxonMobil as Iraqi oil ministers in Baghdad claim the deal violates the country's laws. Every oil exploration contract must be approved by the central government.
Kurdish officials announced they'd struck a deal with ExxonMobil last November. Since then, Baghdad threatened the company would face repercussions if it went through with the deal.
Baghdad doesn't recognize contracts made with the semi-autonomous region without the approval of the central oil ministry. The threat of sanctions against ExxonMobil came within a week of Kurdish officials announcing the deal.
Earlier this month, Iraqi ministers suggested ExxonMobil would be excluded from the country's upcoming lease auction. The country wants to auction 12 exploration blocks that may contain an estimated 29 trillion cubic feet of natural gas.
Baghdad and the Kurds have been at odds over oil rights. Under the country's constitution, Iraq lacks centralized legislation to govern foreign oil companies, revenue sharing and contract negotiation. As a result, Baghdad officials fear they will lose control of Kurdistan's mineral rights.
Meanwhile, the Kurds want to expand oil production because their homeland in northern Iraq is said to hold vast resources of natural gas and oil.
ExxonMobil has pre-existing contracts with in Iraq's West Qurna oil field in the south.