US oil giant Chevron Corp yesterday said, it had signed a deal for acquisition of two oil drilling blocks from Reliance Industries Ltd in Iraq's northern Kurdish region, where local authorities and the central government in Baghdad are locked in a dispute over how to distribute the region's oil wealth.

The California-based company said in a statement yesterday, that it would take over 80 per cent of Reliance Exploration and Production's interest in the Sarta and Rovi blocks north of the Kurdish capital of Irbil.

A 20-per cent interest in Sarta / Rovi is held by Austria's OMV AG.

With the exit from Kurdistan, RIL would be left with a portfolio of 11 overseas oil and gas assets including two in Peru, three in Yemen (one producing and two exploratory), two each in Oman, and Colombia, one each in East Timor and Australia.

Chevron becomes the second US company to defy Iraq's central government by securing oil deals with the Kurdistan Regional Government.

Exxon Mobil Corp's exploration deal last year with the regional government in the north, created a stir last year as it was deemed illegal by the central Iraqi government.

Only last month, Iraq asked US president Barack Obama to stop Exxon's exploration efforts in the autonomous region as the country's stability and economy would be severely impacted.

Kurdistan, with its own government, has clashed with Baghdad over autonomy and oil rights, halting crude exports in April after leveling accusations at the central government of not making due payments.

Another US oil firm has now entered the region thanks to the deal with RIL, which, according to Britain's Sunday Times newspaper was thought to be worth about $200 million.

Chevron has earlier been in deals with Reliance Industries.

A deal in 2011 deal saw Chevron buy out RIL's partner in US shale gas, Atlas Energy, which the Indian company said had undervalued the assets.

Prior to that in 2009, Chevron sold back a 5-per cent stake in RIL's Jamnagar, the largest refinery complex in the world.

Reliance's move to exit the blocks does not surprise industry trackers, given that the company had been focusing more on producing assets rather than exploratory acreages.

Most global exploration and production companies take up stakes in producing assets to cut down financial risks.

Reliance said in a statement that its exit from the blocks was in line with its portfolio rationalisation strategy of international assets, and aimed at value creation for the exploration and production segment.

The blocks, located north of Erbil, cover a combined area of approximately 490 square miles (1,124 square km).

RIL had, in 2007 paid $15.5-17.5 million to the Kurdish Regional Government for the two blocks. The blocks come with oil reserves of billion barrels.