Kurdistan Oil & Gas Development

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Oil Voice

WesternZagros Resources resumes field operations on the Garmian and Kurdamir blocks

The Company's operations in the Region remain safe and secure.

WesternZagros Resources Ltd. (TSX VENTURE:WZR) has resumed field operations on the Garmian and Kurdamir blocks following the stabilization of industry conditions and the return of third party oil field services in the Kurdistan Region of Iraq. In August, following consultation with the Ministry of Natural Resources of the Kurdistan Regional Government, the Company undertook the precautionary step of withdrawing non-essential personnel from field locations and company regional offices. WesternZagros's primary operating consideration is always the safety and welfare of our staff. The Company's operations in the Region remain safe and secure.

"We now look forward to completing the Sarqala-1 workover, the testing of Hasira-1, and the further development of the existing production facilities on the Garmian Block. On the Kurdamir Block, following the submission of the Development Plan on August 31, 2014 we look forward to spudding our first horizontal well at Kurdamir-4," said Simon Hatfield, WesternZagros's Chief Executive Officer.

http://www.oilvoice.com/n/WesternZagros ... 947ba.aspx

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Oil Voice

ShaMaran Petroleum provides an update on the Atrush development

The DQE31 drilling rig resumed drilling operations on the Chiya Chere-8 ("CK-8") on August 30, 2014 and reached a Total Depth of 2195 metres on September 13, 2014.

The EDC Romfor 25 drilling rig is currently being mobilised to the Atrush Block and preparing to spud the Chiya Khere-6 ("CK-6") Phase 2 appraisal well.

ShaMaran Petroleum Corp. (TSX VENTURE:SNM)(OMX:SNM) provide an operational update on the Atrush development in the Kurdistan Region of Iraq.

The DQE31 drilling rig resumed drilling operations on the Chiya Chere-8 ("CK-8") on August 30, 2014 and reached a Total Depth of 2195 metres on September 13, 2014. The bottom hole location is approximately 1.4 ESE of the surface location and the AT-1 discovery well. CK-8 was spudded on July 19, 2014 and reached TD in 33 days. The well found the top of Jurassic reservoir approximately 90 metres structurally higher than the AT-1 discovery well. This well completes the predrilling of the initial four producers for the Phase One facilities, namely AT-2, AT-4, CK-5 and CK-8. The well is on schedule to be tested using a service rig in 2015 prior to final completion and tie-in to the Phase 1 Production Facility.

The EDC Romfor 25 drilling rig is currently being mobilised to the Atrush Block and preparing to spud the Chiya Khere-6 ("CK-6") Phase 2 appraisal well. The well is located in the eastern part of the structure and is being drilled from the same well pad as the Atrush-3 appraisal well ("AT-3"). CK-6 is being drilled to a planned total depth of 2,164 metres targeting the Jurassic reservoir approximately 1.1 km SE of the surface location and the AT-3 well (approximately 10.3 kilometres east of the AT-1 discovery well). The drilling of the CK-6 well is estimated to take up to 70 days. The current plan is for the rig to conduct the retest of AT-3 following the testing of CK-6.

In August 2014 initial work commenced for the construction of the Right of Way for the Atrush feeder pipeline over the Chiya Khere mountain section.

ShaMaran Petroleum Corp. holds a 20.1% working interest through its wholly owned subsidiary, ShaMaran Ventures BV (100% owner of General Exploration Partners, Inc.) in the Atrush Block.

http://www.oilvoice.com/n/ShaMaran-Petr ... 06da3.aspx

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Oil Voice

Gulf Keystone Petroleum provides an update on operations at Shaikan

The Company remains focused on achieving the target of 40,000 barrels of oil per day ("bopd") of production capacity from the Shaikan production facilities ("PF-1" and "PF-2") in line with the Half Year Report schedule published on 28 August 2014.

Gulf Keystone Petroleum Limited, an exploration and production company with operations in the Kurdistan Region of Iraq, today provides an update on the Company's operations at Shaikan, its key producing asset.

The Company remains focused on achieving the target of 40,000 barrels of oil per day ("bopd") of production capacity from the Shaikan production facilities ("PF-1" and "PF-2") in line with the Half Year Report schedule published on 28 August 2014. The Company's staffing levels in the Kurdistan Region, including all key international contractors, returned to normal in the first half of September.

In the period since 28 August 2014, Shaikan PF-1 and PF-2 production has been achieving stable rates of approximately 23,000 gross bopd from three wells at PF-1 and two wells at PF-2. The work on the flowlines to connect additional production wells, Shaikan-7, -8 and -10 later in 2014 is on-going.

Trucking operations from PF-1 and PF-2 continue with approximately 70% of the current production trucked as export crude oil to the Turkish port of Dortyol and sold to the international market by Powertrans, an authorised transportation and marketing agent of the Kurdistan Regional Government's Ministry of Natural Resources ("KRG" and "MNR"). Seventeen cargoes totalling approximately 4.0 million gross barrels of Shaikan crude oil have been sold to the international market since the Shaikan crude oil export sales began from Dortyol in January 2014.

As previously announced, constructive discussions surrounding a payment cycle for past and future Shaikan export crude oil sales are progressing with the MNR, while the Company is awaiting further payments for export sales.

Approximately 30% of the current Shaikan production is being sold to domestic buyers in the Kurdistan Region. Since the publication of the Half Year Report, the domestic market has been providing steady revenue with approximately 220,000 barrels gross sold since 28 August 2014 generating US$9.4 million in gross revenues. The cash receipts associated with these sales as at 30 September were US$5.9 million.

The Company's Q3 2014 Interim Management Statement will be published on 30 October 2014.

John Gerstenlauer, Gulf Keystone's Chief Executive Officer commented:

"Receiving steady revenues from our domestic sales is positive as we continue our constructive discussions regarding a stable payment cycle for past and future export sales. With all personnel now back in country, we are making good progress and look forward to reaching our target of 40,000 gross barrels of oil per day. We continue to manage our expenditure in a prudent manner in order to maximise production, whilst actively pursuing options regarding the Company's 20% working interest in the Akri-Bijeel Block."

http://www.oilvoice.com/n/Gulf-Keystone ... 562f8.aspx

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Oil Voice

Kurdish attempts to sell oil are not going to get support from the Obama administration
By Herman Wang

For two months now, the United Kalavrvta tanker holding 1 million barrels of Kurdish crude has idled in international waters off the coast of Galveston, Texas, awaiting a District Court ruling on whether the oil will be allowed to be sold in the US.

But if the Kurdistan Regional Government is hoping that the Obama administration will soften its stance in opposition to Kurdish oil exports, that doesn't appear likely, even as the US seeks to aid the Kurdish peshmerga in their fight against the Islamic jihadist group IS.

Former Obama administration officials and trade experts say the White House has little to gain from allowing the semiautonomous KRG to further assert its independence from Iraq via oil exports, which could destabilize the war-torn region as other sectarian groups might also seek to break away from their central governments.

'It would be dangerous and destabilizing for the KRG to flout the sovereignty of the Iraqi central government because of the precedent that would send for other provinces in Iraq and other ethnically autonomous movements in the region,' said David Goldwyn, formerly the US State Department's top energy diplomat who now serves as a consultant on international trade issues. 'From a diplomatic point of view, it's not a close call.'

Officially, the US has said that it would prefer to see all sales of oil produced within Iraq's borders go through the Iraqi central government's marketing arm, SOMO. However, the Obama administration has stopped short of saying it would outright block any sales of Kurdish oil.

As Iraq has been thrust into turmoil from the advances of the IS, the KRG, which has taken control of oilfields in the north of Iraq, has loaded several tankers from the Turkish port of Ceyhan, including the United Kalavrvta, in defiance of the Iraqi central government's claim that it has the sole right to export and sell crude produced within Iraq's borders.

The KRG has maintained that the Iraqi Supreme Court has upheld its authority to sell crude produced on its land, and it has appealed to the international community to allow such sales to help finance its efforts to defeat the IS.

A recent Congressional Research Service report noted that the KRG needs to find export markets for its crude if production is to continue, as storage tanks in Ceyhan are full, and it needs the revenue generated from oil sales to finance its government, with the Iraqi Central Government withholding the KRG's share of the national budget.

'This is a grave danger and a huge concern to us, and it should be a concern to US national security,' Karwan Zebari, the KRG's spokesman in the US, told Platts in an August interview, before the US began launching air strikes at IS targets in the region. 'ISIS is a cancer to this region. We have to take care of the Kurdish people and the 1.2 million refugees that have come to us.'

But Goldwyn said the US can aid the peshmerga by providing arms, training and financial aid through the central government, without being permissive of Kurdish oil exports.

'All of those options would be more tolerable to the government in Baghdad than turning a blind eye to unilateral oil sales,' he said. 'Longer term, while you can dial back financial, technical and military support as the ISIS threat is addressed, you can't dial back that freedom to export oil and the fact that a province can have a different system than the rest of the country.'

Mark Herlach, a Washington-based attorney who focuses on energy and trade, said the US is also concerned about the KRG's reported recent resumption of oil exports to Iran by truck. The US, of course, has imposed sanctions on Iran over its nuclear program.

'I find it unlikely that the United States would consider it to be in its interests to encourage the Kurds to sell their own oil, because of the way that would be perceived in Baghdad and because of the potential for that oil to be sold to purchasers whose interests might differ from those of the US,' Herlach said. 'We don't want to do anything that would aid the Iranian regime or help them stabilize their economy when we've been heavily sanctioning them.'

Meanwhile, the US District Court for the Southern District of Texas is still weighing the case of the United Kalavrvta, determining whether it has jurisdiction under US maritime law to rule on whether the oil belongs to the KRG or Iraq.

The buyer of the cargo has yet to be identified, presumably waiting until either the court rules or the two sides come to a resolution on the case, an unlikely prospect.

Expect an appeal, no matter which way the verdict goes. Goldwyn says if the case gets appealed to a higher court, the Obama administration may feel compelled to file an amicus brief stating its preference, which could force the Iraqis and Kurds to the negotiating table.

'That would be a bellwether on how far the US wants to lean forward on this issue,' he said. 'The US is only opposed to the marketing of KRG oil outside of an agreement between Baghdad and Erbil. This could be a bargaining chip.'

http://www.oilvoice.com/n/Kurdish-attem ... e4e58.aspx

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Bloomberg

Gulf Keystone Staff Return to Kurdistan to Increase Oil Output

Gulf Keystone Petroleum Ltd. (GKP) returned all key foreign staff to Iraqi Kurdistan and will increase output after U.S. air strikes eased the militant threat that prompted a mass evacuation of expatriate oil workers.

The explorer is on target to produce 40,000 barrels of oil a day at its Shaikan wells, it said today in a statement. Gulf Keystone has been producing about 23,000 barrels a day since Aug. 28, the Hamilton, Bermuda-based company said.

Oil companies including Chevron Corp., Marathon Oil Corp. and Afren Plc evacuated staff and halted drilling in August after Islamic State seized control of a vast swath of northern Iraq and neighboring Syria. ShaMaran Petroleum Corp. last month resumed work at its Demir Dagh field in Kurdistan and Oryx Petroleum Corp. said it would boost output in the region as the security situation improves.

Producers have also been caught in a dispute between the Kurdistan Regional Government and the central Iraqi government over how to share oil revenue. Regional authorities have been exporting via Turkey since the start of the year against the wishes of the government in Baghdad.

Gulf Keystone is exporting about 70 percent of its output to international markets via Turkey and selling the rest locally, it said. It has exported about 4 million gross barrels so far and is in negotiations with Kurdish authorities about payment, according to the statement.

The company sold about 220,000 barrels of oil to local customers for about $9.4 million last month, it said.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net
To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Alex Devine, Dylan Griffiths

http://www.bloomberg.com/news/2014-10-0 ... utput.html

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Problems persist for oil companies in Kurdish Iraq
Anthony McAuley email: amcauley@thenational.ae

DNO, the Norwegian oil exploration company, said on Wednesday that it faces continued delays to plans to ramp up production at its Tawke oilfield in Kurdish Iraq because of fighting in the region.

In an update on its operations, DNO, which is 42.8 per cent owned by RAK Petroleum wrote: “The company has taken steps to mitigate delays to its Tawke 200,000 barrel per day deliverability target resulting from the withdrawal of third party contractors from Kurdistan during the past few months.”

The company said that exports of Tawke oil to Turkey by the Kurdistan Regional Government for its own account currently average about 90,000 barrels per day. Local sales decreased to 29,960 bpd during the third quarter and currently average about 20,000 bpd, according to DNO.

Separately, Gulf Keystone Resources, a London-listed company whose main asset is the Shaikan oilfield in Kurdish Iraq, said a settlement with the KRG over oil arrears might lead to consolidation among companies operating in the region. The KRG currently owes Gulf Keystone about $250 million for oil and work carried out, John Gerstenlauer, Gulf Keystone’s chief executive, told Bloomberg News. Payment of arrears could help Gulf Keystone boost production at Shaikan fourfold from its current working interest level of 40,000 bpd.

The KRG owes a number of oil companies operating in the region billions of dollars in arrears because of its larger dispute with Iraq’s central government over the national budget and control of oil resources in the Kurdish region. The Kurds maintain that Baghdad has been racking up unpaid payments to it at the rate of $1 billion a month since the start of the year as civil servants in the region go unpaid.

Meanwhile, the central government has been in dispute with the KRG over how Kurdish oil is marketed and accounted for. The KRG has been exporting oil north via Turkey’s port of Ceyhan at a rate of about 350,000 barrels a month for much of this year, but the central government has challenged the legality of those sales in courts in the US and Greece.

“We are pretty close to a solution for the exports going forward and we are continuing to have discussions on the schedule for paying us the amount in arrears,” Mr Gerstenlauer was quoted saying. “Once the payment issue is solved we should see a consolidation in the region.”

Apart from DNO and Gulf Keystone, other companies with interest in the region include Oil Search, Genel and Abu Dhabi Government-owned Taqa.

A number of companies pulled out workers because of the threat from the insurgency of Da’esh, which is also known as Islamic State. Although the threat has subsided somewhat since the intervention of the US and its allies, including the UAE, via air strikes in support of Kurdish and Iraq central government forces, the threat to some oil installations continues.

Nevertheless, DNO said it is continuing to make progress on Tawke, with one well (28) expected to go into production at the end of November and another (27) “spudding” shortly thereafter.

The company said results on other fields in the region – Benenan and Dohuk – were mixed.

DNO also said that production at its main field in Yemen remains stable at 7,000 bpd, “notwithstanding the current security and political environment”. It cannot, however, drill on other prospects in Yemen and has declared force majeure on all of its interests there because of the violence and political upheaval.

http://www.thenational.ae/business/ener ... rdish-iraq

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The Ministry of Natural Resources provides an update on oil export from the Kurdistan Region of Iraq

Erbil, Kurdistan Region, Iraq - The Ministry of Natural Resources announce an increase in oil export from the Kurdistan Region of Iraq. Daily flow rates through the Kurdistan crude pipeline to Turkey have risen from 185,000 in August to nearly 300,000 in the first week of November, representing an increase of some 60 percent over the last four months.

By the end of this year, the Kurdistan Regional Government (KRG) plans to increase export to around 400,000 barrels per day (bpd) and to 500,000 bpd by the end of the first quarter of 2015. The KRG remains on track to meet its production target of 1 million barrels per day by end 2015/early 2016.

On behalf of the people of the Kurdistan Region, the KRG exercises its Constitutional rights to manage, produce, market and sell the natural resources located under its control.

Since January 2014 to date, 34.5 million barrels (mmbbls) of oil have been exported from the Kurdistan Region, of which 21.5 mmbbls were sold through Ceyhan. The balance was trucked to Mersin in Turkey.

The total value of the exported oil in cash or kind is $2.87 billion, of which $2.1 billion was received in cash and $775 million in kind for product swaps (710,000 metric tonnes of products consisting of kerosene, benzine and diesel).

From the cash payments, some $400 million has been used to pay both trucking costs and as part payment to the oil producers. Hence, the net cash received by the KRG during this period is $1.7 billion.

In addition, the KRG has also received a further $500 million in prepayment from committed purchasers of crude against future deliveries of oil piped to Ceyhan.

All proceeds from the sale of oil are treated as part of the KRG's Constitutional entitlement to 17 per cent of Iraq's revenues and to 17 per cent of Iraq's refining volumes for domestic consumption.
The revenue accounts for only a fraction of the KRG's annual entitlement from Iraq's 2014 budget, which has been suspended by the federal government since January 2014.

Nevertheless, these revenues are helping the Region survive the serious challenges to its continued welfare and stability: the vital fight against ISIS terrorists, the unprecedented influx of refugees and IDPs, and the economic sanctions imposed by Baghdad.

The commitment to operations shown by international and domestic oil companies has helped to boost oil production in the Region to record levels, and the establishment of and continuing improvements to the export pipeline infrastructure in turn has allowed an increasing amount of oil to be sold on international markets.

The KRG recognises that, for the continuing growth of the Kurdistan oil industry, it is necessary that contractors receive payments in line with their contractual entitlements. In November, the KRG will make an initial payment of $75 million on account to producers for exports, with further payments to follow on a regular basis. With further production increases, producers will receive their full contractual entitlements.

http://www.oilvoice.com/n/The-Ministry- ... c0c02.aspx

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Bloomberg

Kurds Gain Economic Freedom From Baghdad as Oil Exports Rise
By Firat Kayakiran

Iraqi Kurdistan is gaining financial independence from Baghdad as it exports enough oil to pay its own way.

The Kurdistan Regional Government, or KRG, is shipping directly to Turkey in defiance of the central government, which started withholding its share of state revenue in January in retaliation. Despite that, growing export earnings mean the Kurds last week promised regular payments to producers including Genel Energy Plc (GENL) and Gulf Keystone Petroleum Ltd. (GKP), providing a boost to the local oil industry.

“We now have demonstrable evidence that export from the KRG through Ceyhan is creating a sales channel, which is robust and working well for all parties,” Genel’s Chief Financial Officer Julian Metherell said over the phone today, refering to the Turkish port where Kurdish oil is loaded onto tankers.

“We’ve now had almost 30 cargoes sold and that money is being repatriated to the KRG and is also being used to pay the contractors,” he said.

The Kurds’ efforts to export crude independently have provoked legal action by the central government and fanned speculation that the region will pursue greater autonomy. The KRG and Baghdad are seeking to resolve their dispute after forming a battlefield partnership to repel Islamic State, the militant group that has seized swathes of OPEC’s second-biggest producer since June.

Financially Independent

Exports are set to rise from 300,000 barrels a day to 500,000 barrels in the first quarter, according to the Kurdistan Regional Government. At that rate, they would account for about 17 percent of Iraq’s oil exports -- the same proportion of revenue the central government has been withholding, making the region financially independent of Baghdad, said Julian Lee, an oil strategist for Bloomberg First Word who has worked in the industry for 25 years.

The KRG could keep the money in lieu of its share of state revenue, Lee said.

“I don’t think Baghdad would be happy with this type of arrangement, as it would effectively be one step closer to Kurdish independence and the breakup of Iraq,” he said.

Production capacity from Genel’s Taq Taq and Tawke fields is set to rise to about 400,000 barrels a day in the first half from output of 234,000 barrels as of September, according to the company. Norway’s DNO ASA owns a 55 percent stake in Tawke.

Export Payments

Gulf Keystone also seeks to increase output by 74 percent to 40,000 barrels a day by the end of the year, and plans to boost production to about 65,000 barrels to 70,000 barrels within two years once it secures regular export payments, Chief Executive Officer John Gerstenlauer said over the phone today.

“The operation is going in an excellent fashion, the business is in an excellent shape,” he said. The KRG “committed themselves for steady payment going forward. That’s a big step for them. It’s very encouraging.”

The KRG owes Gulf Keystone about $250 million for oil shipments and investments, he said. The government last week said it would start regular payments to producers, with an initial $75 million payment this month.

The KRG has exported 34.5 million barrels of oil at a value of $2.87 billion since January, it said in a statement last week. It received $2.1 billion in cash and $775 million worth of oil products, such as kerosene and diesel. The sum accounts for “only a fraction” of KRG’s annual share from Iraq’s 2014 budget, it said.

Michael Howard, an adviser to the KRG’s minister for natural resources, didn’t reply to e-mails and a call to his mobile phone.

Making Progress

“With multiple cargoes shipped and paid for, this route to market for Kurdish oil, which bypasses Iraqi infrastructure, is being legitimized,” Daniel Ekstein, an analyst at UBS AG, said in a report this week. “Record production levels confirm contractors are making good operational progress.”

Genel today announced a deal with Iraq’s Kurdistan to develop Miran and Bina Bawi gas fields and agreed to buy OMV AV’s stake in Bina Bawi for $150 million.

The KRG last year signed a deal to deliver Turkey 4 billion cubic meters of gas annually from 2017, rising to 10 billion by 2020, Genel said in August. Today’s deal gives the KRG an “ability to fulfill export commitments to Turkey under the Gas Sales Agreement,” Genel said today.

Turkey, which imports about 60 percent of its 46 billion cubic meters of annual gas needs from Russia, wants alternative sources to reduce risks in its energy supply security. The country imports almost all its gas.

To contact the reporter on this story: Firat Kayakiran in London at fkayakiran@bloomberg.net
To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Alex Devine

http://www.bloomberg.com/news/2014-11-1 ... surge.html

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Spacewar

Baghdad-Kurd deal eases threat to Iraq unity: minister

Baghdad (AFP) Nov 14, 2014 - A preliminary deal between Baghdad and Iraq's Kurdish region on long-running financial disputes has reduced a threat to national unity, the oil minister said Friday.

Baghdad has long opposed the three-province autonomous region's independent export of oil, while Kurdish leaders have criticised Baghdad for withholding budget payments.

In a first move to end the disputes, the two sides agreed for Baghdad to pay $500 million to Kurdistan in exchange for the transfer of 150,000 barrels of oil per day to the federal government.

The crisis between the two sides "created a rift that threatens not only economic, security and political interests, but also threatens national unity," Oil Minister Adel Abdul Mahdi said in a statement.

The dispute was harming both sides, with Iraq losing oil revenue and the Kurdish region not receiving federal budget payments, Abdul Mahdi said.

The agreement, while not final, "opens the way" to permanent solutions, he added.

UN Iraq envoy Nickolay Mladenov hailed the deal as "a very important first step."

"This agreement will allow public sector employees in the governorates of Arbil, Dohuk and Sulaimaniyah to begin receiving their salaries. It will also allow the Kurdistan Regional Government to resume its contribution to the federal budget at a time of national crisis," he said in a statement.

The deal was reached at a meeting in the Kurdish capital Arbil between Abdul Mahdi, Kurdish regional premier Nechirvan Barzani and his deputy, Qubad Talabani, the Kurdish government statement said.

"Nechirvan Barzani will then head a delegation due to arrive in Baghdad in the coming days to reach a comprehensive, fair and constitutional solution to all outstanding differences between the federal government and the KRG," it added.

The initial deal is one of the most significant achievements of the new Iraqi government of Prime Minister Haidar al-Abadi, and marks an important improvement in ties between Baghdad and Arbil, which reached new lows under the previous premier.

The budget dispute has lasted almost a year and had led to a sharp deterioration of relations between the federal government and the Kurdish region.

A resolution of the budget feud is seen as an essential step in improving cooperation at a time when both are battling the Islamic State jihadist group, which has overrun large parts of Iraq since June.

http://www.spacewar.com/reports/Iraq_fo ... i_999.html

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Bloomberg

Genel CEO Sees Merger Shakeout Among Kurdistan Oil Producers
By Ercan Ersoy

The number of oil producers in Kurdistan will slump by three-quarters in five years with the biggest in the industry taking control in the region, according to Genel Energy Plc (GENL) Chief Executive Officer Tony Hayward.

“It’s likely that we’ll end up with, perhaps, five or six of the largest companies operating, with Genel, Exxon, Chevron ending up as major operators,” Hayward said in a Nov. 21 interview during the Atlantic Council conference in Istanbul. “It’s what happens in most hydrocarbon provinces.”

ExxonMobil Corp. (XOM), Chevron Corp. (CVX) and DNO ASA (DNO) of Norway are among more than two dozen international oil companies with a combined 35 licenses in the Kurdish Regional Government area. The companies export about 350,000 barrels a day of crude, pumping it through a Turkish pipeline to the Mediterranean.

Genel has spent more than $1 billion since 2012 on acquisitions in Kurdish-controlled northern Iraq, giving the London-based company joint ventures in seven of the region’s oil and gas fields. This month it agreed to pay $150 million for OMV AG’s 36 percent stake in Bina Bawi, making it the sole owner of the gas field.

“Having made four or five investments in the region, we are continuously looking for opportunities,” Hayward said.

Genel fell 4.8 percent to 752 pence at the close in London, valuing the company at 2.1 billion pounds ($3.3 billion).

The producer expects approval by the end of this year for an agreement signed with the KRG last week to develop the Miran and Bina Bawi gas fields, which will start sending Turkey 4 billion cubic meters of gas a year from 2018. That export volume could more than double by 2020 and increase fivefold to 20 billion cubic meters by 2025, Hayward said.

Gas Reserves

Officials in Turkey said the country plans to build a pipeline to import the fuel.

Development starts next year at Miran, which has gas reserves of 4 trillion cubic feet, and Bina Bawi, with double that volume, according to Hayward. Genel will sell unprocessed gas from the two fields to the KRG at a price of 78 U.S. cents per million British thermal units after investing in drilling wells and flow lines, he said.

“We will earn our return through the condensate we’ll strip from the gas and the oil associated with the gas field and KRG will get this gas at a very cheap price,” Hayward said. The KRG will build a gas-processing plant in which Turkish builders and lenders will participate, he said.

Genel, which doesn’t need partners for the gas fields, would have to spend about $1 billion over three years to develop them, Hayward said. The KRG’s processing plant would cost as much as $6 billion, with potentially about half coming from Turkish bank loans and the rest as equity from Turkish contractors, he said.

Lowest Cost

The KRG will sell the gas to Turkey at $7 per million Btu, according to a 2013 agreement between the regional government and Turkey, he said. The wholesale market price for gas-fired power plants in Turkey is $10 to $11 per million Btu, Hayward said. Turkey imports almost all of its gas needs, with Russia supplying 60 percent.

“This is one of the lowest-cost prices in the world today, actually, and right on the Turkish doorstep, only 100 kilometers away,” Hayward said. “Kurdish gas has certainly the potential to match Russian gas for the Turkish market.”

Turkey plans to build a pipeline extension to the Iraqi border to import gas from Kurdistan, two Turkish officials with knowledge of the matter said last week. It would carry as much as 20 billion cubic meters of gas a year, one of them said.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net
To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Alex Devine

http://www.bloomberg.com/news/2014-11-2 ... ucers.html

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Bloomberg

Iraq to Boost Northern Oil Exports After Deal With Kurds
By Khalid Al-Ansary, Jake Rudnitsky and Naomi Christie

Iraq reached a deal with the Kurdish authorities on oil exports through Turkey, paving the way for increased shipments to international markets.

The agreement allows the shipment of as much as 550,000 barrels a day of oil from northern Iraq to the port of Ceyhan on the Mediterranean along a pipeline operated by the Kurds, Safeen Dizayee, a spokesman for the Kurdish Regional Government, said today by phone. The deal will entrench the supply surplus on the oil market, according to BNP Paribas SA.

The KRG has been shipping crude to Turkey this year in defiance of the central government. The government of former Prime Minister Nouri al-Maliki initiated legal action to block sales, leaving tankers loaded with Kurdish oil stranded at sea. The nation exported its first cargo of Kirkuk crude last week since shipments were halted this year, according to a loading plan obtained by Bloomberg News.

“We’ve seen a steady increase coming through the Kurdish pipeline network in recent months,” Richard Mallinson, a geopolitical analyst at researcher Energy Aspects, said today by phone. The deal allows traders to “buy the oil without the threat of legal action,” according to Mallinson.
Government Export

Kurdish forces took control of the Kirkuk fields in June amid an offensive by militants from the group known as Islamic State. Today’s deal allows for the shipment of 300,000 barrels a day of Kirkuk blend via pipeline, according to Diyazee.

An additional 250,000 barrels a day of Kurdish production will be placed under the control of the federal government for export, according to a statement from Iraqi Prime Minister Haidar Al-Abadi’s office. Payments to Kurdish forces known as Peshmerga will also be made under the deal.

Iraq, the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, boosted oil exports to 2.51 million barrels a day last month, Asim Jihad, a spokesman for the oil ministry, said yesterday. That figure includes a total of 836,000 barrels of Kirkuk blend last month. Shipments of the blend will rise to 4.82 million barrels in December, a separate loading program showed.

Oil tumbled into a bear market in October as the U.S. pumped the most in more than three decades and global demand slowed. Brent futures dropped the most in more than three years on Nov. 27 after OPEC left its output ceiling unchanged, resisting calls from Venezuela and Iran to curb production.
OPEC Supply

“Incremental volumes of oil out of Iraq will only entrench the supply surplus on the market,” Harry Tchilinguirian, head of commodity markets at BNP Paribas in London, said by phone. “Following an OPEC decision not to adjust its supply downwards, we now have a possibility that OPEC supplies will increase.”

OPEC pumped 30.56 million barrels a day, 424,000 barrels a day less than in October, according to a Bloomberg survey of oil companies, producers and analysts. That exceeded its ceiling of 30 million barrels a day for a sixth straight month.

Shipments from fields in the Kurdish region have already risen to more than 350,000 barrels a day, Genel Energy Plc, which operates in the Kurdish region, said today in a statement.

Brent futures dropped 85 cents to $71.69 a barrel as of 3:56 p.m. London time after falling to a five-year low of $67.53 yesterday.

“The cabinet decided to approve the deal between the federal government and the KRG that states oil is the property of Iraqis,” Al-Abadi’s office said in a statement.

http://www.bloomberg.com/news/2014-12-0 ... ports.html

[Anthea]

Reuters

Special report: How Exxon helped make Iraqi Kurdistan
By Dmitry Zhdannikov, Isabel Coles and Ned Parker



In January 2011, Exxon hired one of the best connected men in Iraq: Ali Khedery, an American of Iraqi descent who had served in Baghdad as a special assistant to five U.S. ambassadors and a senior adviser to three U.S. generals.

At a meeting with Exxon a few months later to analyze Iraq's future, Khedery laid out his thoughts.

Iraq under Prime Minister Nouri al-Maliki was moving toward dictatorship and civil war, he said he told the session. "We will see a rise in violence and a total paralysis in Baghdad," he recalled saying. Iraq was likely to align itself more closely with Iran, which will "have an adverse impact on U.S. companies."

The gloomy scenario grabbed the attention of Exxon executives. Just two years earlier, they had signed a $25 billion deal with Iraq to develop West Qurna, one of the largest oil fields in the country.

"No one wanted to hear that they had negotiated a multi-billion dollar deal in a country which will soon implode," said Khedery, who has detailed to Reuters the meeting and subsequent events for the first time.

He suggested an alternative: Kurdistan, a semi-autonomous region in northern Iraq that was politically stable, far from the chaos in the south, and had, by some estimates, oil reserves of 45 billion barrels.

Less than a year later, Exxon signed a deal with Kurdistan. The story of how that happened explains much about the would-be nation's growing power.

Interviews with key players in the secret 2011 negotiations - the talks involved not just Exxon but also fellow Western oil giant Royal Dutch Shell - show how Exxon's decision to invest infuriated both Washington and Baghdad, and helped propel Kurdistan closer to its long-held goal of independence.

Kurds like to say they are the world's largest ethnic group without a state. Numbering some 35 million, they inhabit a band that stretches from Syria across southern Turkey and northern Iraq and into Iran. Most follow Sunni Islam and speak their own distinct languages.

The Exxon deal fueled Kurdish self-belief. The presence of the biggest U.S. oil company has helped not just financially but also politically and even psychologically.

"Part of the process of building our region has to do, of course, with dealing with oil, signing contracts, negotiations with various countries," Fuad Hussein, chief of staff to Kurdistan's president, told Reuters. The Exxon deal validated smaller oil deals Kurdistan had already signed and was "a big victory for us."

Exxon declined to comment.

Despite the deal, Kurdistan's path to nationhood is far from certain. Independence is opposed by Washington, Baghdad, neighboring Turkey and ran. It also remains unclear whether the Kurds have the strength to stand alone in this volatile region. As militant group Islamic State (IS) advanced through Iraq this summer, Baghdad's troops melted away, leaving the Kurdish fighters known as peshmerga to halt the extremists. When IS threatened to take Arbil, Iraqi Kurdistan's capital, the United States bailed out the Kurds with a bombing campaign. On Tuesday, a temporary agreement between Baghdad and Arbil to end their dispute over oil exports and budget payments looked, at first glance, like Kurdistan returning to the Iraqi capital's control.

But the deal does nothing to resolve the issues between Arbil and Baghdad, while forcing the Iraqi capital to effectively acknowledge Arbil's development of its energy resources with Exxon, other foreign companies and Turkey. Arbil has compromised, but it has also locked in the progress of the past three years.

http://www.reuters.com/article/2014/12/ ... TN20141205

[Anthea]

Bloomberg

Iraq Allowed to Sue Kurds Over Texas Oil Tanker in U.S.
By Laurel Brubaker Calkins

Iraq’s oil ministry can sue the Kurdistan regional government for possession of 1 million barrels of crude that have waited in a tanker circling off the Texas coast for more than five months, a U.S. judge said.

U.S. District Judge Gray Miller in Houston rejected the Kurds’ claims of sovereign immunity and said the regional government’s plans to sell its crude in the U.S. gave him authority to hear the lawsuit.

Miller had previously ruled he had no authority to hear Iraq’s dispute because the alleged misappropriation of the oil took place in Kurdistan, outside the jurisdiction of U.S. courts. After the Iraqis reworked their claim, Miller agreed the Kurds’ involvement in the U.S. oil market triggered a legal exception that properly placed the dispute over the cargo in his court.

“The activity complained of is the taking of Iraqi oil for sale, there are specific allegations that it has been sold in the U.S., and the sale of oil in the U.S. creates a direct effect in the U.S.,” Miller said in a ruling yesterday.

In December, the Iraqi central government and the Kurdistan regional government reached a production-sharing accord that let the Kurds export up to 550,000 barrels of oil a day from northern Iraq, with 250,000 barrels of that amount placed under the control of the central government. That accord in Baghdad didn’t address ownership of Kurdish shipments previously exported, according to court papers, leaving unresolved the dispute over the tanker off the Texas coast.

Seizure Bid

Miller said he wasn’t making a final determination on ownership of the cargo. He also said he won’t consider Iraq’s bid to seize the oil or hold proceeds from its sale under court supervision “unless and until the cargo is brought into U.S. waters.” He said Iraq could make its request when that happens.

The two governments have been sparring over the tanker since late July, when Iraq persuaded a federal magistrate judge in Houston to issue a warrant letting federal agents seize the crude and store it ashore at Iraqi expense if the ship entered U.S. territorial waters.

The tanker has been circling a navigational buoy about 60 miles off Galveston, Texas, since then and was still there as of 4:35 a.m. local time today, according to Bloomberg tracking data.

The price of oil has fallen by almost half during the time the ship has waited offshore. The Kurds had initially hoped to sell the cargo for about $100 million.

Property Law

Miller said he’ll apply Texas state laws covering stolen property to the case, which will also require him to interpret Iraq’s constitution and related case law.

“The heart of this dispute is to whom the text of the Iraqi Constitution grants the right to export oil, and whether the KRG converted the oil here,” Miller explained. “U.S. courts regularly interpret other countries’ laws, including constitutions.”

Hal Watson, the Kurds’ Houston attorney, didn’t immediately respond to phone and e-mail messages seeking comment on the judge’s ruling. Jim Loftis, the lead Houston lawyer for the Iraqi Oil Ministry, declined to comment on the ruling beyond confirming that Miller has agreed to let the lawsuit proceed for now.

The case is Ministry of Oil of The Republic of Iraq v. 1,032,212 Barrels of Crude Oil, 3:14-00249, U.S. District Court, Southern District of Texas (Galveston).

To contact the reporter on this story: Laurel Brubaker Calkins in Houston at laurel@calkins.us.com
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Douglas Wong

http://www.bloomberg.com/news/2015-01-0 ... -s-1-.html

[Anthea]

Reuters

Baghdad says progress made on Kurdish oil export dispute

Baghdad and Kurdish regional authorities are making progress to rescue a deal over crude oil exports, Iraq's oil minister said on Sunday, after it nearly unravelled due to Kurdish threats to halt shipments in protest over lack of payment.

Adel Abdel Mehdi said both sides would gain from preserving the December accord, under which the Kurds ship oil from their own territory and the Kirkuk oilfield under Baghdad's control, in return for payments from the national government.

But Baghdad paid only a fraction of the agreed cash to the Kurdish authorities, arguing that the oil shipped did not nearly match the expected volumes.

"The agreement with the Kurdish regional government still stands," Oil Minister Adel Abdel Mehdi told a news conference.

"Everyone achieves substantial benefits from the deal. Today, thanks to the use of the region's (Kurdistan) pipelines, we are able to resume exports from Kirkuk oilfields which were threatened by deterioration due to the halt of production."

Under the deal, the Kurdish Regional Government (KRG) agreed to export via Turkey 550,000 barrels per day from its own fields and from Kirkuk, through Iraq's state marketing authority SOMO.

In return, Baghdad pledged to reinstate budget payments to the Kurds, which it had cut early in 2014 as punishment for the region's moves to export oil independently.

Abdel Mehdi said SOMO was only receiving 300,000 barrels per day at the Turkish terminal of Ceyhan, barely half the agreed volume, but that the amount would increase.

"By the end of the year we will reach an average of 550,000 barrels per day," he said. "There are obstacles, there are problems. All these issues cannot be resolved in one go, but in stages. And we are making progress."

The December agreement was hailed as a breakthrough in helping Iraq increase oil exports at a time when revenues are strained by low global prices and the cost of financing a war against Islamic State militants in the north and west.

Abdel Mehdi said oil prices were rebounding gradually and he expected to see a barrel of crude sell for $64 to $65, up from a low of $45 in January but still sharply down from highs of $115 last June.

The low oil prices have led to delay in payments of international oil companies, with accumulated dues since 2013 reaching more than $20 billion, the minister said.

He said the state budget had allocated 14 trillion dinars ($11.8 billion) partly to cover those payments, and the ministry was working on a $12 billion treasury bond to cover the remainder.

"If we do not provide these payments we might face penalties or a production cut will occur," he said.

Abdel Mehdi said the ministry was reviewing service contracts with the oil companies, citing "some shortfalls and some obstacles" in the deals, but gave no details.

He said the review was taking place in agreement with the oil firms, but dismissed reports that Iraq would move to production sharing deals. "We are still in the pattern of service contracts and we have not entered in production sharing contracts. This issue is premature," he said.

http://uk.reuters.com/article/2015/03/0 ... OE20150301

[Anthea]

Financial Times

Traders aid Kurds with oil payments

Oil companies operating in Iraqi Kurdistan have started receiving direct payments from some of the world’s largest trading houses, as a deepening budget crisis has left the regional government struggling to pay its bills.

Genel Energy, Gulf Keystone Petroleum and DNO all received between $15m and $30m directly from one trading house in January, an official Kurdish government report showed on Thursday, as the semi-autonomous region revealed more details about its independent sales.

Link to Full Article:

http://www.ft.com/cms/s/0/d84685ec-dbb0 ... 66818.html