Petroceltic International today confirmed it suspended production and withdrew all non-essential staff from its operations in the Kurdistan Region of Iraq.
The firm with its joint venture partner Hess Middle East New Ventures made the decision amid heightened hostile activity in the country.
A spokesperson for the company said: “While these developments have not directly impacted our exploration activities to date, in line with other operators in the region, it has been decided, as a precautionary measure, to temporarily secure and suspend operations (including the drilling of Shireen-1 exploration well in the Dinarta licence) and to evacuate non-essential personnel.”
The news comes as the Obama administration has begun directly providing weapons to Kurdish forces who have started to make gains against Islamic militants in Iraq.
The US previously insisted on selling arms only to the Iraqi government.
American officials say the administration is close to approving plans for the Pentagon to arm the Kurds.
Recently the US military has been helping facilitate weapons deliveries from the Iraqis to the Kurds, who had been losing ground to the Islamic State militant group, formerly known as Isis.
The next air drop of humanitarian aid in northern Iraq is likely to be carried out within the next 24 hours after RAF crews were forced to abort the latest attempt amid fears of danger to the people below.
The UK has started dropping aid, including water and solar lanterns, to Mount Sinjar, where thousands of Yazidis are trapped in extreme conditions after fleeing the advance of Islamic State (IS) forces.
A second drop was due to take place in the early hours of this morning but could not be carried out because of risks to the people below.
It is understood that another drop will take place within the next 24 hours.
An RAF spokesman said: “The ongoing effort to get badly-needed supplies to displaced people in Northern Iraq continues.
“The safety of the Yazidi community is paramount. With a number of people at the drop sites this morning, the crew made the responsible decision not to carry out the air drop to ensure that the lives of those in the area would not be put at risk. We plan to deliver the next drop as soon as possible.”