Gulf Keystone doubles down on Kurdistan: we find one billion barrels here, one billion barrels

Author carillion View Profile Add to favourites Ignore Date posted today 08:36 Subject Iraq Oil Report View parent message Votes for this Posting Voted 164 times. Message http://www.iraqoilreport.com/business/companies/gulf-keystone-doubles-down-on-kurdistan-8292/ By Ben Lando of Iraq Oil Report Published July 6, 2012 SHAIKAN - On a hilltop at Shaikan, one of Iraqi Kurdistan's biggest oil fields, the drillmaster on a Gulf Keystone rig faced a dilemma at Well No. 5. As the drill tore deeper through the earth, drilling fluid that was supposed to return to the surface was instead being lost into the myriad fractures in the rock. The company was forced to alter its composition of water and chemicals - and to slow the drilling down. Yet this setback also portended a hidden reward. "Those cracks make it difficult to drill. But the fact that it is difficult to drill with the fractures means the wells are more productive," said Richard Lowe, the Gulf Keystone drilling manager. "It's almost sort of an inverse relationship – it's challenging because of the fractures and drilling conditions, but the upside is the actual scale of the field." Gulf Keystone Petroleum is at the forefront of the oil boom in Iraqi Kurdistan, and the drilling of this well has been just one of the many aspects of the company's operations that have presented both considerable challenges and enormous opportunity. Like the geology of its exploration block, the political situation in Kurdistan has presented Gulf Keystone – along with dozens of other foreign oil companies – with a slew of risks. The semi-autonomous Kurdistan Regional Government (KRG) is locked in a nearly decade-long political dispute with Baghdad that, at its core, calls into question the legitimacy of the KRG's contracts. That political risk has helped the companies negotiate lucrative production sharing contracts that promise significant profits – especially compared to Baghdad's more conservative technical service contracts. In its 2011 annual report, released last month, Gulf Keystone estimated that "full field development is estimated to cost in the order of $7 billion to $10 billion gross, with the first 100,000 (barrels per day) of production estimated to cost less than 5% of that amount." Geological irregularities may have raised the front-end costs of the project – operating a single rig can cost more than $100,000 per day – but at the other end lies an oil field that could hold 10.5 billion barrels of oil in place, according to Gulf Keystone estimates. And that's just one field. Gulf Keystone is operator or junior partner in four projects in Kurdistan, which has signed 46 contracts with oil and gas companies to explore for and produce oil. According to a Gulf Keystone investor publication released in late May, the company's two most prospective blocks to date – Shaikan, which the company began exploring in 2008, and Akri-Bijeel, awarded in 2007 – will in 2015 have a combined 200,000 bpd of exports. Final reserves evaluation of Shaikan – and Kurdistan's other newly discovered fields – will only take place after full exploration and assessment, which takes considerable time and money. Until then, nobody is certain how much oil really lies beneath the land, and how much of it might be economically viable to extract. The Kurdistan Regional Government (KRG) and outside analysts have estimated that Iraq's semi-autonomous northern region could hold between 30 billion and 50 billion barrels of reserves. Iraq as a whole – not including the fields discovered or developed by the KRG since 2003 – boasts 143.1 billion barrels. The country as a whole is under-explored, and presents a massive opportunity for Iraq, foreign oil companies, and global crude consumers. Political risk Companies working in Kurdistan have encountered challenges far more vexing than the difficulties of drilling through kilometers of irregular rocks. The KRG has been locked in a nearly decade-long dispute with the central government in Baghdad over how to structure the Iraqi federal state. One of the most consequential state powers – and a flashpoint for political conflict – is the right to sign oil contracts. Baghdad, which claims exclusive contracting rights, calls the KRG's deals illegal and refuses to endorse the terms that the Kurds negotiated. The Oil Ministry has also banned companies with oil contracts in the north from signing new deals in the south. The dispute has stymied oil development, especially in Kurdistan. With the notable exception of ExxonMobil, which signed six contracts with the KRG in October 2011, many of the world's largest and most capable companies have been reluctant to invest, both for fear of angering Baghdad and because the central government controls exports. KRG Minister of Natural Resources Ashti Hawrami has said that Kurdistan could easily boost production to 300,000 bpd, but most of that potential has been shut in. Kurdistan once exported crude through Baghdad-controlled pipelines, under the terms of a stop-gap agreement signed in January 2011, but the KRG cut off exports on April 1 amidst a dispute over payments. In theory, every new discovery should add pressure for politicians on all sides to find an agreement, which would increase the pace of investment in the oil sector and raise crude output that is already regularly generating between $6 billion and $8 billion per month for Iraq. In reality, however, Iraq's oil development – in both the north and south – has complicated the political equation. As companies pour money into the expensive early stages of their projects, they create facts on the ground that raise the stakes of any political negotiations. Since 2007 Parliament has intermittently tried to pass comprehensive oil legislation, which could help resolve some of the major disputes. Members of the Parliament Oil and Gas Committee have reported that a central sticking point in their failed negotiations has been the question of how to bring existing oil projects into harmony with a new, prospective legal framework. Doubling down Meanwhile, companies have responded to the new oil discoveries with a sense of urgency. Despite the lack of a foreseeable resolution to the conflict with Baghdad, investors are honoring their contracts and building up their portfolios. At the annual CWC Iraq Petroleum conference in London last month, Hawrami said he's expecting more top international oil companies – a caliber he's now able to command after ExxonMobil's entry last year – to sign for the remaining empty blocks and to begin buying out the smaller companies that gambled on Kurdish crude years ago. Gulf Keystone is among the oil firms doubling down on their KRG gamble. The company, which is listed on the London Stock Exchange's Alternative Investment Market, also operates the Shaikh Adi block and is junior partner in the Ber Bahr and Akri-Bijeel blocks. The company has hired outside consultants to oversee the sale of its 20 percent stake in Akri-Bijeel, in an effort to raise cash. Ber Bahr, operated by Genel Energy, the Anglo-Turkish firm now led by ex-BP chief Tony Hayward, just saw the completion of its first exploration well. At Shaikh Adi, Gulf Keystone spudded its second exploration well in May. And a third exploration well was spudded in May by the operator Kalegran, which is a subsidiary of Hungary's MOL. Adapting to challenges The more Gulf Keystone drills in the KRG, the more the company learns about the area's geology, and they apply lessons learned to speed up the drilling of future wells, according to Lowe. So too must Gulf Keystone adapt to some unfriendly conditions above the surface. A gas injection well for Shaikan will be drilled in an area now called Snake Valley, nicknamed for its population of dangerous wildlife. The Akri-Bijeel well No. 1, located 1,400 meters above sea level on a flat-topped mountain, was out of service for more than 20 days recently because a lightning strike burned out the motors powering the drill. The overall progress of the company's operations has also created challenges. As the wells are expected to kick up even more crude, Gulf Keystone is expanding a temporary extended well test facility (EWT), which currently has about 7,000 bpd of flow-through capacity, into a permanent production facility that will have 40,000 bpd capacity by early 2013. Shaikan wells 1 and 3 will be joined by Shaikan 4 to this facility, which is referred to as EWT 1. Shaikan wells 5 and 6 will be tied to another new facility, EWT 2. Storage capacity, currently at 40,000 barrels, will be more than doubled. And tanker trucks, averaging 200 barrels each, will double their loading rate. They currently load two at a time, which allows for about 30 trucks per day. The Ministry of Natural Resources (MNR) has staff on site to document the trucks. The maximum the facility has every loaded in a day was 7,500 barrels. The orders for filling up tankers comes from the MNR. "So when they say they want 5,000 per day, we supply 5. If they say 4, we supply 4," said one official at the facility. The eventual output from the production facility depends on the KRG's future plans for its crude – how much oil will be sent to domestic refineries, the Iraq-Turkey Pipeline (ITP), or future pipelines. Initial design and route survey has been completed for a 122 kilometer pipeline to connect Shaikan with the ITP at Feyshkabour. Permission to implement the plan will depend on broader policy decisions that are playing out within the Erbil-Baghdad feud, which could alter the route. Another complicating factor is the composition of the crude from Shaikan, which is heavier than the oil currently flowing through the ITP. Another pipeline, with between 400,000 bpd and 600,000 bpd of capacity, is set to be built for the crude that cannot be injected into the current pipeline blend. The company is also looking at supplying excess gas to a local power plant because they expect they will have more than can be used to generate power at the production facility. "We need to have infrastructure in place – you have to have export pipelines, you have to have gas pipelines," said Ron Kuntz, the production facilities manager. "We'll just do it in nice, safe steps." In the spotlight After Norwegian firm DNO (operator of the Tawke field, among others) and Genel Energy (operator of Taq Taq, among others), Gulf Keystone is the biggest player in the KRG when you combine acreage and production activities. It has had its unwanted moments in the spotlight. CEO Todd Kozel's divorce was public knowledge – and splashed in the tabloids – as a settlement focused on his Gulf Keystone earnings and ownership. That saga appears to be over. The company has also come under intense media speculation that it will be bought out. Sources within the company have said there are no active talks with any buyers. This fall, a London court is to hear a lawsuit filed by a little known U.S. firm Excalibur Ventures, which claims Kozel included them in the original bid for Shaikan, but excluded them when the final deal was signed. The lawsuit is seeking $558 million.

Gulf Keystone has also sued a blogger for using the media to manipulate stock prices, even as the value of its own stock has been – like others in Kurdistan – accused of being overvalued. "We will not tolerate malicious attempts to damage the company's reputation and share price," Kozel said in a May 10 statement following heavily circulated rumors the company would raise money by selling shares. "We have instructed the company's lawyers to use all means necessary to protect our shareholders from this malicious and unfounded attack."

Cautious optimism Shaikan by itself would be a massive asset by any stock exchange's reckoning -- but only if the oil can be sent to market. Like other firms who have banked on Kurdish oil wealth, Gulf Keystone awaits a breakthrough in the ongoing dispute between the KRG and Baghdad. Its share price often jumps when the news from Iraq suggests a political victory for Kurdistan, as when the semi-autonomous region landed ExxonMobil. And the stock also tends to subside after bad news, such as the export cutoff this spring. The company has sold more than 600,000 barrels to the domestic market in Iraqi Kurdistan, according to an official with access to the sales data. KRG officials and others familiar with the domestic market estimate the price between $40 and $65 per barrel, with $25 per barrel being returned to Gulf Keystone. The company has spent nearly $400 million in Iraq and is carrying out plans to invest more than $200 million, as it enhances its current production facilities, builds new infrastructure, and awaits direction for a new pipeline that will send heavy crude to the Turkish border. That pipeline is pegged at $170 million and, according to recent announcements by Hawrami, would have a 500,000 bpd capacity and potentially transit directly from Kurdish-controlled Iraq into Turkey. What happens to that crude, and how its value is translated into revenues for Gulf Keystone, depends ultimately on how Baghdad and Erbil find an agreement on it and the 47 other production sharing contracts. Without an agreement, Shaikan crude will be shut in, sent to a less-profitable domestic refining market, or exported unilaterally by the KRG without Baghdad approval – likely a combination of the three. Any of those scenarios present significant risk and uncertainty. Yet as the KRG presses ahead with development of its oil sector at large, both the Kurds and its company partners are betting that the opportunity to make money will sway Baghdad, as well as other big investors. The presence of ExxonMobil – and the size of Gulf Keystone's discoveries to date – suggests the company will have little trouble convincing investors and prospective buyers that Kurdish crude will find its way to market, one way or another. Big potential Richard Lowe, the drilling manager, said Kurdistan wells have a 70 percent discovery rate – compared to 10-15 percent worldwide. "Each well in Kurdistan is unique because it is so heavily folded and fractured," he said about the geology, whose complexity has offered unexpected rewards. Shaikan's well no. 6, for example, was initially drilled at the far end of the field to test the "spill point of the structure" -- where the hydrocarbons reserve ends and water was expected – but when the drill got more than 3 kilometers deep, it actually found more oil. "It was a very, very good well for us," said country manager Adnan Samarrai, "it is very promising." The work in the mountains of Kurdistan can be more laborious and time-consuming than in other parts of the world. It takes a month – 150 truckloads — to take down, transport, and put up a rig. "It is extremely challenging," said Lowe, "but the rewards are quite good -- we find one billion barrels here, one billion barrels there." =============== KRG to Sell Gas Directly to Turkey Posted on 04 July 2012 The Kurdistan Regional Government's (KRG) Minister of Natural Resources, Ashti Hawrami has said the Region is planning to sell natural gas directly to Turkey in the next two years. According to a report from AKnews, he told the Caspian Gas Forum in Istanbul that the Kurdistan Region may sell natural gas to Turkey even if there is no consensus with Baghdad: "We plan to sell 10 billion cubic meters of natural gas to Turkey, and later Europe in the long-term." The KRG move might take the tensions with Baghdad to new heights if it starts to sell oil to Turkey, and could also put a strain on Turkish-Iraqi relations. == Iraq: Shahristani attempts to prevent new KRG oil contracts Posted on: Fri, Jun 22, 2012 Deputy Iraqi PM for Energy Hussein Al-Shahristani is said to be trying to prevent at least five major oil companies from signing contracts with the Kurdistan Regional Government (KRG) for investment projects in the KRG-controlled area in northern Iraq. The following 436-word report sheds light on the subject and tells what about the companies in question and what about Al-Shahristani’s attempts to prevent them from signing contracts with the KRG. http://www.tacticalreport.com/view_news/Iraq:_Shahristani_attempts_to_prevent_new_KRG_oil_contracts/2746 === 20/06/2012Iraq warns French companies on deals with Kurds http://www.expatica.com/fr/news/french-news/iraq-warns-french-companies-on-deals-with-kurds_235166.html The deputy premier for energy affairs on Wednesday warned French companies that any contracts with Baghdad would be scrapped if they signed deals with local or regional governments in Iraq. The autonomous Kurdistan region in north Iraq has signed a number of oil contracts with foreign firms, but the federal government considers them illegal and insists all such deals must go through Baghdad. Hussein al-Shahristani "warned French companies working in the oil sector in Iraq against signing contracts with (entities) other than the Iraqi government," during a meeting with French ambassador Denis Gauer, the deputy premier's office said. Shahristani asked Gauer to convey to the French government that if any French firm signs "a contract with the Kurdistan region or another local government without the approval of the federal government, this will mean the end of its contracts in Iraq," his spokesman Faisal Abdullah told AFP. Shahristani had previously said that French oil giant Total would "be considered in breach of Iraqi laws" if it signed any deals without the approval of the Baghdad government. Total chief executive Christophe de Margerie said earlier this year that his firm was in talks over potential deals with the three-province Kurdistan region. Total is part of a consortium along with China's CNPC and Malaysia's Petronas seeking to ramp up output at the Halfaya field in Iraq's southern Maysan province, which has proven reserves of about 4.1 billion barrels. Shahristani's remarks on Wednesday come a day after Prime Minister Nuri al-Maliki's spokesman, Ali Mussawi, said the premier believes a contract between US oil giant ExxonMobil and the Kurdistan region is dangerous and could lead to "breaking up the unity of Iraq." Maliki last week requested that US President Barack Obama intervene to block the Exxon deal, which the company signed with Kurdistan in October, Mussawi said. Iraqi Kurdistan has been locked in a standoff with Baghdad for months, one of a series of intertwined political crises which have escalated into calls for Maliki to be removed from power. ==== Iraq Mega Projects 2011: Chinese Company China Petroleum & Engineering Corp. (CPECC) Awarded $174 Million Contract Google Plus Facebook Twitter LinkedIn Email A Friend Print This Page Save as PDF Add to Reading List . Related Projects CNPC/Total/Petronas/SOC - Halfaya Oilfield Redevelopment - Crude Processors Plants CNPC/Total/Petronas/SOC - Halfaya Oilfield Redevelopment - Phase 1 Projects Monitor -------------------------------------------------------------------------------- The Chinese oil firm China Petroleum and Engineering Corp. (CPECC) have been awarded a $174 million contract to build three crude processors, and has begun work on the contraction on the first production network of southern Iraq's Halfaya Oil Filed. The new plants will raise the production of Halfaya Oil Field by 100,000 barrels per day, which currently produces approximately 12,000 bpd and plans to produce 20,000 bpd by the end of 2011 and a further 90,000 bpd by the first quarter of 2012 said Head of Mission Oil Company Ail Maarij. Iraq Mega Projects 2011 taking place from 18-20 October 2011 at the Ritz Carlton, Istanbul, Turkey will look in-depth at case studies showcasing the challenges, progress and solutions faced with the developments of Iraq's oilfields. Senior Iraqi Professionals and high level industry executives have given great support for the conference this year which brings together operators, Iraqi representatives, local governor's, service providers and experts that together will develop Iraq. Key officials supporting Iraq Mega Projects 2011 include H.E. Thamir Al-Ghadhban Chairman of the Advisory Commission to the Iraqi Prime Minister of Iraq, H.E Adnan Al-Jahabi Chairman of the Parliamentary Energy Committee and Natiq Al-Bayati of the Advisory Commission. Key industry support has already been confirmed for Iraq Mega Projects 2011; sponsors to date include: Caterpillar, Emerson Process Management, Olive Group, ExxonMobil, Techint, OIEC, Oxy, Statoil and Total. -Ends- The CWC Group is an award-winning company specialising in energy and infrastructure, developing knowledge, creating commercial opportunities and strategic solutions for government and industry by offering professional training, conferences and exhibitions. All media enquiries to: Hanisha Mohammad Marketing Manager The CWC Group +44 20 7978 0344 hmohammad@thecwcgroup.com ============== Feb 06 2011 more articles from . Pakistani oil contractor expands from Dubai base Google Plus Facebook Twitter LinkedIn Email A Friend Print This Page Save as PDF Add to Reading List . In This Article International Petroleum Investment Company -------------------------------------------------------------------------------- Related Oil terminals in east Libya forced shut: local sources Factory owners complain of losses as Riyadh diesel woes continue Crude prices mixed ahead of expected ECB rate cut Motiva shutdown may call for Aramco FDI review Iran discovers 6 billion barrels of new oil reserves -------------------------------------------------------------------------------- Sunday, Feb 06, 2011 Gulf News Wins $300m contract for abu Dhabi pipeline project Dubai: Pakistani engineering firm Techno Engineering Service has chosen Dubai for its international headquarters and its expansion in the Middle East and beyond, Vishal Nagpaul, head of Techno Engineering’s international operations, told Gulf News in an interview yesterday. The company, which has been in oil and gas plant and pipeline construction for over 30 years and ventured into the UAE three years ago, has won a $300 million (Dh1.1 billion) contract for parts of the construction of the Abu Dhabi Crude Oil Pipeline (ADCOP), the largest export pipeline project currently in development in the UAE. Techno Engineering has been chosen for the hardest parts of the pipeline, which leads from Habshan in the Arabian Gulf to the Fujairah export terminals through the rough terrain of the Al Hajar mountains. “It is one of the toughest pipeline construction projects in the UAE,” said Nagpaul. The route of the pipeline crosses “lots of wadis, roads, rocky slopes, ponds, farms and utility lines.” The construction included installation of the pipeline on steep slopes greater than 45 degree angles, where Techno Engineering used a specially imported cable system to ensure fast working under these sections. This was the first time such a system has been used in the UAE, Nagpaul said. Completion The pipeline construction is on track and expected to be completed before the end of April this year. The Adcop project is spearheaded by the International Petroleum Investment Corporation (Ipic) , along with the China Petroleum Engineering and Construction Corporation, a subsidiary of the China National Petroleum Corporation. The 370-kilometre pipeline will transport 1.5 million barrels of oil per day. This will allow more than half of the UAE’s exports to bypass the strategic chokepoint at the Strait of Hormuz. Nagpaul said that Techno Engineering is also working on a cross country pipeline in Iraq, the largest pipeline project currently undertaken in the country. “Working in Iraq has been fraught with uncertainties and filled with challenges. However, Techno is confident that they will also complete this project on time,” Nagpaul said. He added that the company is also close to finalising project contracts in Algeria and Turkmenistan, which mark important steps for its expansion in the Mena region. By Arno Maierbrugger, Deputy Business Editor © Gulf News 2011. All rights reserved === Iraq to Offer Kirkuk Refinery for Bidding by End-2012 Posted on 29 June 2012. Tags: Kirkuk, National Investment Commission, NIC, Refineries, SCOP, State Company for Oil Projects Iraq’s State Company for Oil Projects (SCOP) will offer the construction of the Kirkuk oil refinery to international companies on a build, operate and own (BOO) basis in December 2012, according to a report from Steel Guru. The report quotes Mr Salar Ameen, deputy chairman of the National Investment Commission (NIC) as saying that “feasibility studies are ongoing with two Italian and American advisers. The Iraqi oil ministry will make public the specifications before the end of the year. The refinery will cost approximately of USD 6 billion with a capacity of more than 150,000 barrels per day of oil“. Mr Ameen said that companies from the US, China, Korea, Saudi Arabia and the UAE have expressed interest in bidding for the project. Construction is expected to be completed by the end of 2016. The Kirkuk refinery project is part of the oil ministry’s plan to build several refineries across the country to meet increasing domestic demand. These refineries will have a total capacity of 740,000 barrels per day at an estimated cost, according to the report, of $20 billion. (Source: Steel Guru) == Jihadists kidnap senior Iraq oil official in Baghdad Oil Weapon Update: "Gunmen kidnap senior Iraq oil official in Baghdad," from Reuters, with thanks to JE: BAGHDAD (Reuters) - Gunmen kidnapped a senior official of Iraq's oil ministry after he left work in Baghdad on Thursday, police and ministry sources said on Friday, highlighting the lawlessness still afflicting the vital sector. The incident happened the same day U.S. troops killed Iraq's al Qaeda leader Abu Musab al-Zarqawi, whose demise the Iraqi Oil Minister Hussain al-Shahristani said would help improve the country's oil production, particularly in the north. The sources said Muthana al-Badri, Director General of Iraq's State Company for Oil Projects (SCOP), was on his way home in the Sunni district of Adhamiya when gunmen in four cars stopped his car and abducted him but set his driver free. They said the kidnappers have not contacted the ministry or Badri's family. (Photo: Najaf Refinery) =================================== splitting iraq: how likely is an independent kurdistan? The disputes between Baghdad and Iraqi Kurdistan have led some local politicians to call for the semi-autonomous region to secede from Iraq and become its own country. But, as one Kurdish commentator argues, this is far from realistic. Because now it’s all about money and oil, not politics. Recently there has been a lot of comment about an independent Iraqi Kurdistan. As tensions between Baghdad and the semi-autonomous, northern state of Iraqi Kurdistan continue, the Kurdish have been playing the “independence card”, with local politicians and commentators airing their views on the subject like never before. It is no secret that the majority of Kurds, if not in fact, all of them, would love to see an independent Kurdistan. And the easiest way for a Kurdish politician to become popular is to call for an independent state. Although the Kurdish president, Massoud Barzani, has recently given the impression that he wants to see an independent Iraqi Kurdistan, the political party to which he belongs, the Kurdish Democratic Party (KDP), and the other major political party in the area, the Patriotic Union of Kurdistan (PUK), have so far resisted similar temptations. In fact, most Kurdish politicians are still talking about a “united Iraq” despite Kurdish public opinion against this idea. And they have a point. If you are a Kurdish politician and you need to maintain diplomatic relations with your neighbours, and if you’re aware of the economic and political realities for Iraqi Kurdistan, then it’s very hard to call for Kurdish independence and really mean it. It is possible that Iraqi Kurdistan is politically mature enough to be independent – but the region is not ready for such a step in economic or military terms. And it is true that, over time, the political consequences of Kurdish independence have always been considered greater than the economic consequences. But that no longer applies. A clear example is the Kurdish rebellion against former Iraqi leader Saddam Hussein’s regime in the early 1970s. When Hussein started to become friendly with the Soviet Union, then-US President Richard Nixon began to fund, and encourage, the Kurdish to fight for their independence against Hussein, as part of a strategy to weaken Hussein’s regime and general policy against the USSR. But just as the Kurdish revolutionaries seemed to be succeeding, it became clear that none of the parties supporting the Kurds actually wanted them to win their independence – the ploy was purely political – and support was withdrawn. Additionally the question of Kurdish independence has always troubled the surrounding countries; none of them have ever wanted a Kurdish State. But now, given Iraqi Kurdistan’s oil and gas potential and the benefits that could bring surrounding countries in terms of trade, those neighbours have softened their stand on Kurdish independence – and they’re likely to soften even further as trade ties develop. There are also strong economic overtones to Baghdad’s policy toward Kurdish independence. Baghdad sees the various disputes over revenue sharing, oil contracts and oil exports currently going on between Baghdad and Iraqi Kurdistan as necessary to its centralist agenda. Partially, it is about deterring other Iraqi regions, some of which have suggested the idea, from asking for independence to become a region with autonomy similar to that enjoyed by Iraqi Kurdistan. Although, given the advanced stage of the oil industry in the Kurdistan region, Baghdad realises that their disputes with Iraqi Kurdistan are unlikely to end in their favour, they still have to send out a clear, centralist-flavoured message. Imagine, for example, if a province like Basra - which currently has most of the Iraqi oil reserves and which has the only access to ocean-going transport – achieved the same kind of independence Iraqi Kurdistan had. Given its strategic position, it might eventually become as powerful as the central government. Even for the Kurdish themselves, the main question about an independent Kurdistan comes down to economics. Up until now the economics of independence have always been an afterthought; even the Kurds have subconsciously ignored them. However in modern times, if the petro-dollars from Baghdad stopped flowing and people started to feel the pinch in their pockets, the idea of independence might not look so romantic after all. This is the reality: Iraqi Kurdistan is land locked; it is dependent upon selling its own natural resources and importing consumables in exchange. Having bad, or no, relations with neighbouring countries is simply not an option for Iraqi Kurdistan. And Iraqi Kurdistan has been operating like a state within a state, but without the duties of a state. The Iraqis have continued to send 17 percent of the Iraqi federal budget to the Kurdish (although it was delayed this year). Most of the Iraqi federal budget is generated by oil revenues and currently, most of Iraq’s oil is produced in southern Iraq, in places like Basra. Any northern oil tends to come from the disputed Kirkuk region. Iraq's oil production is rising, set to reach over 3.4 million barrels per day by the end of the year according to former Iraqi Oil Minister Thamir Ghadhban, also Chairman of Advisory Commission to Iraqi Prime Minister. And with this, the federal budget is also swelling – so is Iraqi Kurdistan’s 17 percent share. However due to disagreements over oil policy, revenue sharing and Baghdad’s refusal to pay oil company costs, Iraqi Kurdistan is pursuing its own oil production agenda. However in Iraqi Kurdistan, this sector is still largely underdeveloped. And, due to this and aforementioned disputes, the state is not contributing as much as it can to Iraq's oil exports. Which is why many Iraqi politicians have already argued that the Kurdish are getting an unfairly large share of the country’s income even while they’re not contributing as much. The most obvious move for the Kurdish would be to annex the disputed area of Kirkuk, where much of the northern oil is currently being produced, and get full use of the Kirkuk-Ceyhan pipeline to Turkey’s Mediterranean coast. The northern Iraqi city of Kirkuk has actually been one of the flash points of the struggle between the Iraqis and the Kurdish over the past few decades. During former Iraqi leader Saddam Hussein’s regime, the Kurdish population was driven out of Kirkuk so that Arab Iraqis could control the oil rich area. Today Kirkuk remains largely Kurdish and the government of Iraqi Kurdistan claims it belongs to them. Although legally it belongs to Baghdad, currently the city is, in fact, under the de-facto control of the Kurdish government. Even in the unlikely scenario that such an annexation happens, in the short term Iraqi Kurdistan would still struggle to generate as much income as Baghdad sends them. Putting the required infrastructure into place would take time and would need the consent of neighbouring countries, like Turkey. The economic consequences of losing the over US$11 billion that the Kurdish receive from Iraq would be devastating for the region; the whole economy could implode, which in turn would lead to many political and social problems. Iraqi Kurdistan has other income streams and income opportunities and the promise of a hydrocarbon pipeline to Turkey offers a life line but in the short term, this income will not be enough to pay salaries in the bloated public sector or to invest in rebuilding the infrastructure, that would eventually lead to growth and an increase in oil and gas production. In fact it’s disputable whether Kurdish oil production could ever match Baghdad’s current contribution. If Kirkuk and other disputed territories are taken out of the equation, then the amount of oil Iraqi Kurdistan could export may never match up to the 17 percent of the budget that they’re currently getting. So although many Kurds yearn for independence, when the state’s finances dry up and there are budget cuts, unemployment and a reduction in living standards, those views may well change – and, whatever other faults they may have, almost all Kurdish politicians can see this how this would be extremely unpopular. An independent Iraqi Kurdistan would not just lose its Baghdad budget, the state would also go from holding some part of the balance of power in the Iraqi parliament – the Kurdish bloc has been referred to as “kingmakers” because the two major opposition blocs have fairly equal numbers in Parliament – to being a small state, surrounded by far larger, far less friendly states in the area. Should Iraqi Kurdistan secede, it is not even clear whether the international community would recognise the would-be country as a fully fledged nation-state. In international terms, Kurdish independence would rely heavily on the Iraqi Kurdish relationship with Turkey. In fact, contrary to popular opinion in both Turkey and Iraqi Kurdistan, an independent Kurdistan could benefit Turkey immensely. Despite historical antipathies (Turkey is still fighting a battle against the Kurdish population within its own borders), Turkey is the most likely nation to support the idea simply because then they would have greater influence over Iraqi Kurdistan – and Iraqi Kurdistan has the potential to become a future, cheap energy source fuelling the booming Turkish economy. In conclusion, if it comes to a referendum on independence – something that President Barzani has suggested during ongoing disputes with Baghdad – Kurdish politicians would be caught between a rock and a hard place. On one hand, if they advocate independence, they face not only economic hardship but also regional isolation, a loss of influence in Iraq and increased dependence on the goodwill of both Turkey and Iran. On the other hand, if they stay part of Iraq, then they must help to build the nation for real and find solutions to outstanding, contentious issues – such as the oil exports and the disputed territories like Kirkuk and Mosul. Should they decide upon the latter for the time being– and this seems most likely and most sensible option– then Kurdistan can become more of an assertive regional player. Eventually this would give the region a better bargaining power when the statehood, that so many Kurdish long for has more potential to become a reality. http://www.niqash.org/articles/?id=3087 == Parliament to investigate Ninewa-Exxon talks Iraq's Parliament has ordered a six-member committee, led by the head of the Parliament's Oil and Energy Committee, Adnan Janabi, to investigate claims made by the governor of Ninewa province that he is negotiating oil deals with ExxonMobil. "The main reason for forming this committee is to look into and investigate what has been said and published in the media – that the governor of Mosul, Mr. Atheel Nujaifi, was holding talks and coordinating with the government of Kurdistan and the fore... http://www.iraqoilreport.com/oil/production-exports/parliament-to-investigate-ninewa-exxon-talks-8 == Author orang minyak View Profile Add to favourites Ignore Date posted today 00:08 Subject How long can the dam hold? Votes for this Posting Voted UP 19 times. Message 'Evening, all patient and impatient GKP investors. Well, another day at the £2 ish mark today, and as someone else pointed out, this uncanny stability it is starting to look a lot like when we were at £2.80 just before the move north, to £4.50, without news. And then we all know what happened afterwards .... I am actually feeling quite bullish at this point in time. Without going into complete details, let me recap the clues that to me indicate a big move up, supported by news, is on the way very soon. 1) 50% rise in 3 days supported by serious volume, 140 to 210p. Confirming to me, that we are not being rated so much as being PLAYED by the Market. Also confirms to me the huge potential of GKP and other Kurdy oilies. 2). A number of credible posters and key players confirming the big events have occurred or are about to occur. Shaikan BIR sale; entry of Total and other supermajors; sale of other BIRs (NT since May, Viiva, and today Leadham (although that casual 1 week, 4 weeks, 1 year who cares, was a bit callous to all the investors with frayed nerves). Plus Minister of Natural resources Hawrami, who should know. 3) Indications that the supermajors cant wait to announce their entry, and tell their shareholders the wonderful news. We have discovered a new Libya, and guess what, we have just got ourselves a large piece of oil real estate in it! Gonna be good for those director bonuses.... We know WZR is champing at the bit, the KRG wont be able to hold it and the other oilies back for long! 4) Strong and committed statements from Turkey recently affirming Kurdy oil and gas exports to Turkey. Wise moves by Turkey to look at rejuvenating existing ICG pipeline to Turkey. Baghdad needs Turkey onside too, presumably as an alternative export route in case Iran closes the Straits of Hormuz. 5) moves to oust Maliki look like they are in final stages. Question Maliki in Parliament with one week's notice. 1 week gap. Then move the no-con vote. Either success or failure, then KRG can move on. 6) Unexpected hearing and disclosure order re Excalibur. As Sicilian pointed out the pressure is on for Excalibur to settle. 7) new OIP numbers for Shaikan due anytime this month (2 days before the AGM perhaps?). Shaikan will be boxed up and ready to go, and any supermajor buying GKP will have a reasonable guarantee of a known asset, enough to buy the whole lot as a bit of a punt, tho not if you believe the 100B barrels all-one-giant-field theory. 8) Perella Weinberg fingerprints all over the virtual news embargo for GKP. Only one reason, advanced negotiations for GKP sale underway, waiting for the final numbers to be agreed. My conclusion is the dam will break soon. The news will have to be released very soon (otherwise one of the supemajors or minnows will leak it). The city already knows, so wont be long till the whole world knows. Dont worry. If you must worry (as all of us with an ounce of sense do, occasionally or frequently) perhaps we should all agree to do it off-board. The MMs strike to lower the price when they sense fear. How do they read the emotion in the market? Easy, just read this BB, we are transparent as a sheet of glass. In the peak of the bear raid down to 140, you could feel the fear and despair on this Board. Any MMs attacking the price would've rubbed his hands with glee. How about it, chaps? Stiff upper lip, what ho? Don't show your fear on this BB, even if you feel it? Keep the MMs guessing. Fear feeds the bears; do not feed the bears. When this SP hits £3 (could do it within 3 days judging from recent past form) it might do a retrace - well don't panic then. Sell a few if it helps you to calm your nerves and not feel so bad if there is a retrace (I know I will get pilloried for that advise, but hey ho). Keep calm and carry on. And watch and wait until it hits £4, £5 and so on until the double figures that all is investors are here for, at the end of the day. OM === UPDATE 1-Turkey importing crude from N.Iraq in road tankers Fri, Jul 13 05:31 AM EDT * Volumes could rise to 100-200 road tankers per day * Kurdistan locked in energy dispute with Baghdad government * Turkey eyes energy projects with both Kurdistan, Baghdad BOLU, Turkey, July 13 (Reuters) - Turkey has begun importing 5 to 10 road tankers of crude from northern Iraq daily and the volume could rise to 100-200 tankers per day, Turkish Energy Minister Taner Yildiz said on Friday. Iraq's autonomous Kurdistan region, which borders Turkey, is locked in a dispute with the central Iraqi government over oil exports and energy policy has become a sensitive topic. A Kurdistan regional government source said earlier this week that it had sent a small amount of oil to Turkey by trucks in exchange for diesel, adding it needed the refined product to run power stations. "Crude purchases from northern Iraq have begun with a volume of 5-10 road tankers. This may rise to 100-200 tankers a day," Yildiz told reporters at a ground-breaking ceremony for a power plant in western Turkey. Ankara has increasingly courted Iraqi Kurds as its relations with the Shi'ite-led central government in Baghdad have soured. Turkey is a major investment and trading partner for Iraq, especially for Kurdistan. The Kurdish government source said this week Kurdistan was not getting enough of the refined product under supplies controlled by the central Iraqi government, making the trade with Turkey necessary to fill the gap. Kurdish Prime Minister Nechirvan Barzani has said that if the central Iraqi government did not provide Kurdistan with its share of refined products, the region would be forced to act. According to the Kurdistan government, Iraq has cut supplies of products to Kurdistan to 16,826 barrels per day (bpd) from 32,116 bpd from April 25, far below its 140,000 bpd allocation. Kurdistan infuriated Baghdad last year by signing production sharing contracts with U.S. group Exxon Mobil. A provincial governor said earlier this month he would also like to enter talks with Exxon, the world's largest publicly traded energy company. Separately, Turkey and Kurdistan are also in talks for the direct sale of natural gas to Turkey. But in a sign of moves to soothe ties between Ankara and Baghdad, the two governments have started technical work on shipping crude oil from Basra in southern Iraq via the Kirkuk-Ceyhan pipeline to Turkey's Mediterranean coast. ========