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IRAQ’S oil ministry has banned Chevron from operating in the country after the oil major acquired assets in the semi-autonomous region of Kurdistan in the north.

Chevron bought an 80% interest in two Kurdistan oil blocks owned by Reliance, Rovi and Sarta, and operatorship of the two production sharing contracts with the Kurdistan Regional Government (KRG). The ministry says in its statement that any oil deals with the KRG are illegal, as the Iraqi federal government has sole control of the country’s oil reserves. By assuming responsibility for its own oil, Kurdistan is contravening the Iraqi constitution.

The ministry further accuses the KRG of using oil smuggling networks through neighbouring countries such as Iran and Turkey, rather than handing oil to the federal government.

The oil ministry says that it is surprised by Chevron’s actions, which are “in sharp contrast” to its stated principles of “transparency, openness and commitment to business ethics.” It adds that Chevron should be “embarrassed” by its actions.

“In line with the policy of the Ministry of Oil based on the provisions of the Constitution, the Ministry announces the disqualification of Chevron and prevents them from entering into any contract or agreement with the Federal Ministry of Oil and its subsidiaries, particularly with regards to oil extraction, unless it retreats from the contract it signed with the Ministry of Natural Resources Kurdistan – Iraq,” says the ministry.

A Chevron spokesperson would not comment directly on the events but told tce that the company has been working with Iraq’s government since 2003 when it initiated its first technical assistance programme.

“Our goal is to help Iraq achieve its objectives for the oil and gas industry by participating in opportunities that meet our investment criteria,” she says.

The Iraqi oil ministry has previously barred ExxonMobil from oil and gas licensing rounds after it signed deals in Kurdistan, and threatened to ban Total after it announced it was negotiating deals in Kurdistan. In May, Kurdistan said that it would build a new oil pipeline over the Turkish border.