Royal Dutch Shell has allegedly withdrawn from oil development talks with the Kurdistan regional government in an attempt to protect its southern Iraq investments, according to the Financial Times.

The FT speculates that Shell pulled out of talks in the hope of saving a possible $17bn natural gas deal which the Iraqi government cleared on Tuesday. It is alleged that the central government In Baghdad is looking to enforce a de facto ban on companies operational in Kurdistan, the FT said.

“Baghdad's real power lies in denying future contracts and Shell still had something else on the table. They had not signed the southern gas field deal,” one unidentified source told the FT.