Turkey-Kurdistan oil pact imminent
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.