POLITICS AND KRG PIPELINE EXPORTS
- In December the Kurdistan Regional Government and the Federal Government of Iraq ("FGI") reached an agreement on crude oil exports through northern Iraq. The agreement sees 550,000 bopd of exports via the KRI-Turkey pipeline, of which 250,000 bopd comes from KRG controlled fields and 300,000 bopd from FGI controlled fields, which in aggregate will be marketed by SOMO (State Oil Marketing Organisation). In return, the KRG will receive its 17% allocation of the Iraqi budget and $1bn of funding for the Peshmerga in 2015. The KRG has reserved the right to export for its own account crude oil in excess of its 250,000 bopd contribution
- Operational implementation of the agreement occurred in early January 2015, with crude oil from FGI controlled fields exported through the KRI-Turkey pipeline. As a result, pipeline exports increased to over 450,000 bopd in early January with further growth expected in the near-term. Financial implementation of the agreement is expected after passing of the 2015 Iraqi budget
- As of early January, more than 40 cargoes of KRI export crude have been lifted from Ceyhan, establishing a five month track record of predictable sales
- Production from Taq Taq and Tawke is not constrained by pipeline capacity
- Genel's operations in the KRI remain safe and secure
- At Taq Taq, plans to increase surface processing capacity to 150,000 bopd through mobilisation of a temporary production facility are on track for Q1 2015. Completion and commissioning of the second central processing facility is on track for Q3 2015. Works to increase the processing capacity at the Tawke field are on schedule to complete in Q1 2015
- Final PSC amendments for the new commercial structure governing the Miran and Bina Bawi fields are expected to be completed in Q1 2015. Progress is being made on the sale and purchase agreement for OMV's 36% operated stake in the Bina Bawi field, completion of which is subject to the finalisation of documentation
Tony Hayward, Chief Executive of Genel, said:
"The oil export agreement between the Kurdistan Regional Government and Federal Government of Iraq is the culmination of significant political progress made throughout 2014. The agreement provides a pragmatic solution, ensuring oil exports from the KRI are able to reach their full potential for the benefit of the whole of Iraq, with the KRG receiving its full budget allocation. The export route through Ceyhan is now well established, tanker liftings are frequent, and sales are regular and predictable. Further payments to contractors in the KRI are expected to follow.
Our robust balance sheet, coupled with rising onshore oil production amongst the lowest cost in the world, and the significant financial flexibility in the portfolio, leaves us well positioned to continue to grow even in a period of sustained low oil prices."
(Sources: Genel Energy, Yahoo!)