Turkey-Kur­dis­tan oil pact im­mi­nent

The Kurdish Globe - - FRONT PAGE -

Tony Hay­ward, the former chief ex­ec­u­tive of BP who now leads Lon­don­listed Genel En­ergy, has pre­dicted a for­mal agree­ment be­tween Turkey and Kur­dis­tan within months that will lead to full-scale ex­ports from the oil-rich re­gion of Iraq from next year.

His forecast of an im­mi­nent pact be­tween gov­ern­ments in Ankara and Er­bil to ap­prove full-scale ex­ports from the semi-au­tonomous ter­ri­tory came as Genel com­mit­ted to fur­ther ex­plo­ration in Kur­dis­tan and north Africa.

Genel, along with sev­eral other early-stage pro­duc­ers who have struck deals with the Kur­dis­tan Re­gional Government, re­main locked in a stand-off with Iraq’s fed­eral government in Bagh­dad that has chal­lenged the le­git­i­macy of li­censes granted by the re­gional government.

A com­pro­mise deal last Septem­ber that led to a short-run re­sump­tion of ex­ports through Bagh­dad-con­trolled fed­eral pipe­line sys­tem from Kur­dis­tan has since col­lapsed lead­ing the KRG to sanc­tion small-scale ex­ports of oil from fields to Turkey by tanker.

On Wed­nes­day, Mr Hay­ward de­scribed the level of ex­ports by tanker, run­ning at no more than 5,000 bar­rels a day, as “sym­bolic for sup­ply of ex­ports be­tween Turkey and the KRG”.

But he pointed to good progress in the build­ing of a new pipe­line ca­pa­ble of ex­port­ing up to 1m bar­rels of oil a day to the Turk­ish bor­der that is ex­pected to be op­er­a­tional by 2014.

“Some things are not in our con­trol but we be­lieve we will see in­ter­est­ing progress in the first half that will see full-blown ex­ports in 2014,” said Mr Hay­ward.

His com­ments came as Genel re­ported its sec­ond an­nual set of re­sults, which saw rev­enues jump from $24m to $333m fol­low­ing the crank­ing up of pro­duc­tion that is largely con­sumed lo­cally.

Dur­ing the year the com­pany com­mit­ted about half of a $1.9bn net cash pile to ex­tend­ing its ex­plo­ration and pro­duc­tion as­sets though it still ended 2012 with net cash of $1bn.

Genel, which was cre­ated in 2011 when a £1.3bn cash shell cre­ated by Mr Hay­ward and fi­nancier Nat Roth­schild floated and then bought Turkey’s Genel En­erji, ended the year with a pro­duc­tion ca­pac­ity of 80,000 bar­rels a day.

As it awaits the op­por­tu­nity to ex­port to more lu­cra­tive mar­kets, Genel was com­mand­ing prices of be­tween $70 and $80 a bar­rels for sales in the domestic mar­ket, said Mr Hay­ward.

He added that Genel would de­cide whether or not to em­bark on a re­turn of funds to share­hold­ers to­wards the end of the year af­ter tak­ing a “dis­ci­plined ap­proach” to any fur­ther in­vest­ments.

“We have no resid­ual obli­ga­tions [to re­turn funds] from the time the com­pany was set up,” he said. He also de­nied sug­ges­tions of any splits on the tim­ing of any distri­bu­tion of funds.

“The board is com­pletely aligned be­hind the strat­egy of the com­pany – there is no dis­sent be­tween the found­ing share­hold­ers.”

Shares in Genel, that floated at £10, slipped 13p to 746p on Thurs­day.

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