Chevron Makes Oil Exploration Deal in Iraqi Kurdistan LONDON - Chevron, the second largest U.S. oil company after ExxonMobil, is entering Iraqi Kurdistan by buying a majority stake in two exploration blocks in the region from Reliance Industries of India. The move by a key U.S. company underlines that the Kurdistan region of Iraq, which is run by an autonomous government that is often at odds with Baghdad, is becoming an increasingly attractive investment destination for the international oil industry. The Kurdistan Regional Government and its oil minister, Ashti Hawrami, have been aggressively courting the international oil companies since the fall of Saddam Hussein in 2003. Alex Munton, an analyst at Wood Mackenzie in Edinburgh, said that since 2005, companies have made about 20 discoveries with an estimated 8 billion barrels of recoverable oil and gas. "It has been pretty spectacular over the last few years," he said. At first Kurdistan mainly succeeded in attracting relatively small companies, such as DNO of Norway and Heritage Oil of Britain. Larger, better-known companies have gradually been coming in. ExxonMobil helped break the ice when it signed exploration contracts last year. Baghdad criticized the move as illegal and barred Exxon, which has a large project in southern Iraq, from bidding in the recent auction for exploration acreage. Chevron coming in is another coup for Kurdistan. The region now has a roster of sizeable players represented, including Marathon and Hess of the United States. Companies are attracted to Kurdistan because of its exploration potential and business-friendly approach. Kurdistan offers financial terms that are more attractive than the service contracts being offered by Baghdad. Under the Kurdistan profit-sharing contracts, the companies will earn $3 to $5 per barrel, compared to less than $1 per barrel on oil deals in the south, according to Mr. Munton. Yet doing business in Kurdistan still carries considerable risk. At the moment the only way to export oil from the region is by pipeline through Iraq or by truck to Turkey. Baghdad, which believes that Kurdistan's oil should be under its control, and Kurdistan have been unable to reach an agreement on exports. Pipeline exports have been halted for several months because of a dispute with Baghdad over payments. Kurdistan's production capacity is about 250,000 barrels per day but actual output is much lower because of the export restrictions. The oil produced is now mostly sold in Kurdistan for about $60 per barrel, well below the world price. "The political risks are not to be taken lightly," Mr. Munton said. It is going to take time for agreements to be reached. Mr. Munton said that the entry of major companies into Kurdistan was "a two-edged sword." They bolster Kurdistan's prestige, but they infuriate the oil authorities in Baghdad and may cause Iraq to bargain even harder in reaching export agreements. The two blocks Chevron is buying are north of Erbil, the Kurdistan regional hub. Chevron is paying $200 million to $300 million for 80 percent stakes, according to a person familiar with the transaction who was not authorized to speak about it on the record. The Austrian company OMV holds the remainder.