You’ve sunk your wells, started drilling; have extracted tens of millions of barrels of oil for export. But a year down the line, you still haven’t been paid.  This is the predicament faced by several leading European oil companies – including the Genel Energy, run by ex-BP boss Tony Hayward, Norway’s DNO and the UK’s Gulf Keystone – caught in the stand-off between the Iraq’s central administration in Baghdad and the semi-autonomous Kurdish Regional Government (KRG) over how the spoils of Kurdistan’s oil reserves should be shared.  The KRG deposits are huge, amounting to roughly a third of those in Iraq, where one in ten of the world’s accessible barrels are to be found. Kurdistan is among the cheapest places to drill for oil on earth. The total cost per barrel – a measure that includes exploration and extraction spending – is around $12, compared with about $50 for US shale, says Will Forbes, head of Oil and Gas at research advisory Edison in London.  Politically, things are more complex. While the deals the three firms struck with KRG resulted in their blacklisting by Baghdad, they require some of blessing from the Iraqi government to function.

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