Tensions simmer over disputed areas in Iraq

Rising tensions between Kurdish forces and military leave Iraq in delicate situation. Last Modified: 17 Jan 2013 14:01 Al Jazeera has recieved reports that there has been progress in talks between Kurdish military officials and the Iraqi central government. The two sides are trying to defuse an armed confrontation over disputed territory. But neither side has finalised a deal on how to deploy a joint armed force into the area, which is claimed by both Kurdish and Iraqi governments. Al Jazeera's Omar al-Saleh reports from the South of Kirkuk. ================ No Chance Chancers: Jan 14th/2013 By Scara While thinking about valuations of Shaikan in the early days, I have been taking a look at some key data over the period between the 'signing of the licence' and the 'discovery of oil'. I think you may find the results quite interesting... 5 November 2007 - GKP had no assets in Kurdistan. Share price closed at 37p, and GKP had a market cap of about £100 million (based on approximately 270 million shares in issue). 7 November 2007 - RNS confirmed that on 6 November 2007 GKP had bought a 75% share in the Shaikan licence and 20% of Akri-Bijeel. The share price closed at 38.5p. The following day the share price closed at 39.5p, giving GKP a market cap of about £107 million. >>>> BUT THAT FIGURE OF 39.5p WAS THE HIGHEST GKP SHARE PRICE AT ANY TIME UNTIL 20 AUGUST 2009, TWO WEEKS AFTER THE ANNOUNCEMENT OF THE SHAIKAN OIL DISCOVERY ON 6 AUGUST 2009! <<< Yet, in between, we had: 7 March 2008 – RNS announces ‘start of seismic acquisition’ on Shaikan. Share price = 33p. 23 April 2008 – RNS announces completion of seismics on Shaikan. Share price = 28.5p 25 June 2008 – RNS provides results of seismic data analysis. That announcement had included “GKPL estimates that should they drill a discovery well the five zones combined have potential unrisked in-place oil volumes of up to 2 BILLION reservoir barrels**”. Share price = 31p. 28 April 2009 – RNS confirms spudding of Shaikan-1. Share price = 14.75p, about 60% less than the value on the date the Shaikan licence was signed. 6 August 2009 – RNS confirms “Significant oil discovery in Kurdistan” stating “Gulf Keystone will use this new data along with existing seismic and geological data to evaluate the potential resources discovered in this formation. GKP is currently using 300 to 500 million barrels of oil in place as a preliminary estimate for the tested interval”. Share price closed at 28p and the company had a market cap of about £135 million. BUT note also that the increase in market cap from £100 million on 5 November 2007 to £135 million on 6 August 2009 had also been accompanied by an injection of funds totalling around £35 million and the issue of about 200 million shares - those increases were made up primarily largely of 89.5 million shares at 28p on 25 July 2008 raising £25.1 million; 14.6 million shares at 14.5p raising £2.1 million on 7 May 2009 (part of SEDA arrangement) and 75.6 million shares at 9p, raising £6.8 million on 3 August 2009. From this, it is easy to see that ‘the market’ had failed to attach any additional value to the company from GKP’s 75% share of the licence AT ANY TIME between 6 November 2007 and the oil discovery on 6 August 2009… and the share price itself had remained lower than its highest point of 39.5p (on 8 November 2007) every single day until 20 August 2009. So, my question to the valuation experts would be: “At what point did Excalibur lose a single penny by not being involved in the Shaikan licence (directly or indirectly) between its signing and 2 weeks after the oil discovery… even if they had managed to fulfil their part of the alleged bargain and provide any of the much needed funding for Shaikan? And, as a supplementary question "when did Excalibur actually commence sounding out Clifford Chance regarding the possibility of legal action against GKP?" Mind you, I think we already know the answer to question 2! From bobobob5 on 28 November 2012 - "August 2008 - Shaikan commercial oil discovery. Clifford Chance retained by Excalibur in the autumn of 2009 to look for litigation finders". Funny that – yet again we seem to have evidence that the Wempens were only interested when there was no possibility of ‘losing’, and no requirement for them to provide ‘skin in the game’. Surely... No stake, No risk and No added value =. No chance AND No reward. AIMHO and please DYOR GLA, scaramouche ============== Jan 8th Funding a Shortfall By Scara In October 2012, the Iraqi budget for 2013 was set at 138 trillion Iraqi dinars ($115 BILLION), based on expected oil revenue of $90 per barrel and the Kurds exporting an average of 250,000 barrels per day in 2013. http://www.iraq-businessnews.com/2012/10/24/2013-budget-spending-up-18/ From this, Kurdistan was to be allotted 14.3 trillion Iraqi dinars (about $12 billion), which represents about 11% of the overall available budge, when reparations paid to Kuwait each year are taken into account. This low ‘allocation’ however clearly irked the Kurdish authorities. http://www.rudaw.net/english/kurds/5486.html

Extract: Rashid Tahir, deputy finance minister for the Kurdistan Regional Government (KRG), told Rudaw, “Iraq’s total budget has increased by 21 percent this year; however, the KRG’s portion has decreased.”

http://www.rudaw.net/english/kurds/5552.html Extract: The Kurdistan Regional Government (KRG) customarily has received 17 percent of the total federal budget, but Kurdish officials and MPs say there are calls by Maliki’s State of Law Party to trim the Kurdistan Region’s allocation in the 2013 budget. “Things are not clear yet. We don't know if there is a direct attempt to reduce Kurdistan's budget share, or an indirect way to cut our budget through increasing the sovereign and governance budgets of the Iraqi government," said Najeeb Najeeb, a Kurdish MP in the Iraqi Parliament. "Cutting the budget of Kurdistan is unacceptable and against the laws and treaties between Baghdad and Erbil," said Arif Tayfur, deputy speaker of the Iraqi Parliament. This is of course yet another example of the constant friction that exists between Maliki’s government and the KRG. But, importantly, these details do also help us to focus on the figures that matter to Kurdistan. They suggest that, IF Kurdistan can be assured of a net income in excess of $12 BILLION in 2013, they will be no worse off than they are under the current fractious arrangement. Now, the Kurds had ALREADY agreed to a target of 250,000 bpd for 2013 based on revenue of $90 per barrel. After costs for production and distribution, which I believe would be $6 - $10 per barrel, and payment of ‘profit oil’ net to contractors (amounting to a similar figure) , it is likely that the KRG will earn about $70 - $75 from each barrel of oil exported. 250,000 bpd x 365 days x $70 would give the KRG a net income of about $6.5 billion in 2013, a SHORTFALL of around $5.5 BILLION compared to what Maliki and co. are reluctantly prepared to give the KRG under the existing arrangements. >>> And, from these figures, it seems likely that there will continue to be a shortfall until they are exporting in the region of 500,000 bpd <<<. Ashti Hawrami has forecast that Kurdistan could be producing 1 million barrels per day in 2015, and Dragon_Ventures excellent post from September 2012 shows how this will be achieved. http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&action=detail&id=10034802 It also shows that, of that total, SHAIKAN is expected to export 150,000 bpd and AKRI-BIJEEL 50,000 bpd, amounting to 20% of Kurdistan’s target output. So, it would seem perfectly feasible to me that Kurdistan could be in a strong enough position to become completely self-sufficient in mid-to-late 2014 at which point exports would be around 500,000 bpd. But NOT quite yet! WHY then (I find myself asking), would the KRG risk starting INDEPENDENT exports now, with the political situation in Iraq a veritable powder-keg… and their vital budget allocation already under threat from an increasingly dictatorial Maliki? It cannot surely be as simple as that they have had enough of the oppressive regime of Maliki, and Shahristani’s constant opposition to their PSCs. They must have their own trump card. The only explanation I can come up with is that Kurdistan must have obtained some form of LOAN guarantee (perhaps from China or the USA in return for some degree of privileged treatment) or from new-found partner Turkey. OR that they could perhaps be ready to sell off (secretly?) their BIR’s and carried interests in certain licences… where the oil figures have been proven but very little oil actually produced! We have of course had many debates on here as to how much a super-major or NOC might pay for GKP’s 54.4% net WI in Shaikan’s 13.7 billion barrels, allowing for a 25% or 30% Recovery factor, and assuming that the existing terms of the PSC were taken on by the buyer. FWIW, my own current estimate is $8- $10 billion… assuming about 2 billion barrels of reserves are attributable to GKP. But how much might an extremely interested and influential player offer the KRG in exchange for what amounts to about one-third of Shaikan (15% BIR’s plus 20% KRG interest), with ‘revised’ terms and conditions up for negotiation? Remember that there would be no spurious court case in progress impeding their ability to show clear evidence of title! Could that party, for example, offer the KRG the sum of $5-6 BILLION or so…. just enough to make up for the 2013 Budget SHORTFALL? AIMHO and please DYOR. GLA, scaramouche ================== True Cost of Failure: Jan14th/ 2013 By Scara Very good article dated today, well worth a read IMO - apologies if already posted. http://www.executive-magazine.com/op-ed/Reaching-beyond-Iraq/5443 I particularly liked the last part as it highlights very well how futile the endless arguments are between Baghdad and Erbil, and the huge opportunities that are being lost to both the Iraqi and Kurdish people by the continued political impasse. (Note :My CAPITALS used for emphasis)... Extract: >>> The International Energy Agency recently said that Iraq could make up “45 percent of global oil production growth by 2035”, and that if that happens, Iraq “would surpass Russia as the second-largest global oil exporter.” Yet, these figures include the Kurdish fields. If they found a way to work together, Baghdad and Erbil could indeed turn Iraq into the preeminent global oil player, TO THE BENEFIT OF BOTH. Reconciliation between the two does not seem to be a near-term prospect however — indeed, Baghdad revoking approval for Turkey’s energy minister to visit Erbil in early December can only spur KURDISH THOUGHTS that they'd be BETTER OFF GOING IT ALONE. <<< One other paragraph from the article also strikes a chord with me: "But as an economic strategy, Baghdad’s attempt at strong-arm practices seems self-defeating, chasing away major oil companies just when it needs massive infrastructural investments to beef up its own oil production and revenues." I could not agree more. Hmmm... How's that 9-10 million barrels per day production target by 2017 looking, Mr Shahristani, a target that YOU re-iterated to Platts less than one month ago? http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8000757 Looks to me like an incontrovertible indicator as to the true cost of failure, and an energy policy which is teetering on the brink of falling apart! GLA, scaramouche ================= . Iraq finance minister escapes bomb attack on his convoy Sun, 13 Jan 2013 20:11 GMT Source: reuters // Reuters BAGHDAD, Jan 13 (Reuters) - A roadside bomb hit Iraqi Finance Minister Rafaie al-Esawi's convoy west of Baghdad as he left a meeting on Sunday, wounding two of his guards, his office and security sources said. It was not clear whether Esawi was the target of the bombing. The Sunni Muslim minister is caught up in a crisis that has triggered protests in Sunni regions and is straining Shi'ite Prime Minister Nuri al-Maliki's power-sharing government. "A roadside bomb exploded near his convoy. His car was not hit and he is safe, but two guards were wounded," a spokesman for Esawi's office said. Police sources confirmed the convoy had been hit by shrapnel, but said there had been no injuries. Thousands of Sunni Muslims have taken to the streets over the last three weeks to demonstrate against Maliki's government. The protests are stirring worries that Iraq could slide back into the sectarian confrontation of its recent past. They erupted in late December after officials arrested members of Esawi's security team on terrorism charges. Authorities denied that the case was political, but Sunni leaders rejected the arrests as part of a crackdown on their community. Sectarian tensions are still raw in Iraq after the intercommunal slaughter that killed tens of thousands a few years after the 2003 invasion that ousted Sunni strongman Saddam Hussein. Violence has eased sharply but, a year after the last U.S. troops left, Iraq's government is mired in infighting over how to share power among the Shi'ite majority, Sunnis and ethnic Kurds. =============== 22 killed in third day of Iraq violence Save this story to read later by: Ammar Karim From: AAP January 18, 20136:44AM A SPATE of bombings targeting Shi'ite Muslims across Iraq has killed 22 people, the latest in a spike in unrest amid weeks of anti-government protests and a political crisis engulfing the country. The attacks marked the third consecutive day of violence, which has claimed 81 lives overall, including that of a Sunni Iraqi MP killed by a suicide bomber and 33 others who died in twin car bombs in an ethnically mixed northern city. It comes as Iraq grapples with a long-running political dispute, with Prime Minister Nouri al-Maliki facing protests hardening opposition against his rule and calls from many of his erstwhile government partners for his ouster. No group has claimed responsibility for the latest bombings, but Sunni militants often launch attacks in a bid to destabilise the government and push Iraq back towards the sectarian violence that blighted it from 2005 to 2008. The bloodiest of Thursday's blasts took place in Dujail, 60 kilometres north of Baghdad, where a car bomb outside a Shi'ite mosque killed nine people and wounded 56 others, said town mayor Mohammed Hassan. A car bomb killed seven other people and wounded 17 near a football stadium on the outskirts of the predominantly Shi'ite city of Hilla, south of the capital, officials said. Bombings also struck Baghdad, Hawija and Karbala, while two soldiers and two policemen were killed in separate shootings near the northern cities of Mosul and Tuz Khurmatu. There were no casualties in Hawija but two people were killed and one wounded in a roadside bomb in north Baghdad. And in Karbala, a Shi'ite shrine city south of the capital, 17 people were wounded, including eight Afghan Shi'ite pilgrims, in a morning blast, followed by two explosions in the evening that left at least seven more injured. Read more: http://www.news.com.au/breaking-news/world/killed-in-third-day-of-iraq-violence/story-e6frfkui-1226556285614#ixzz2IGnGNgHY ================= http://www.iii.co.uk/investment/detail/?display=discussion&code=cotn%3AGKP.L&it=le&action=detail&id=10345760 It's a fair question mate but I think everyone's getting their knickers in a twist over this TA business. Let me be clear: I think that the GKP daily chart is very bullish and that, IMHO, it's highly likely that 161p was lowest price you'll see again. What we're talking about here is the possibility of a 23p drop versus a much, much bigger rise, possibly to the End Game. So, in reality, this TA discussion is really just who is right. IMHO there's really not a lot to be gained to the downside. Traders will trade it anyway, but trades depend on timeframes and risk/reward ratios must be calculated accordingly. We are all expecting good news. There's only ever been one instance of actual "bad" news and the current CC appears to be proving that to be a complete farce so even that bad news is questionable. In hindsight there is almost always a signal prior to news. It's just a question of whether the analysis has been correct or not. In essence, you're asking me if the chart supports the possibility of a really good RNS in the next week or so, right? My answer is yes. Could there be some "tree shaking" beforehand? Possibly. If I was an investor rather than a full time trader (and part-time investor) would I sell looking to buy back lower down now? No. Do I expect the sp to rocket straight up with barely any retrace? Again, no. Just one final point re news. Since the days of the original discovery, on how many occasions has the SP started a new bull move on the day of a good news RNS? Genuinely I don't know the answer but I don't recall it being often so why the reliance on news as it quite often gets sold in to. All the best mate. I, too, was lucky to be here early on and I wish nothing but the best for everyone who's had to "suffer" this journey (I remember well the poster who famously bought at 131p in 2009 (was it 69cupidstunt?) - there will be people who bought in the 400s too). I can't wait for it to end though... =========== another ‘slam dunk’ day in court for TKI/GKP with J. Jay Park QC, expert witness for Excalibur in the area of oil and gas law having to concede under cxx that Excalibur had to “shoulder it's responsibility as per the CA clause 8 point 1”? following on from last night and answering a query from Healyron: It appears my sources are one step ahead of the game..As i said the backers are panicking and to confirm this the court has stated article 8.1 of the collaboration agreement as to be null and void as excalibur havent qualified for this..The whole argument stemmed from new york law from where the initial claims were lodged....It appears no defence is now left and even counter claims as i said we live in interesting times.. 8 APPLICATIONS FOR ACREAGE 8.1 Upon completion of the evaluation of any parcel of Acreage which shall in relation to each such parcel of Acreage take place by the Deadline, the Operating Committee representatives shall meet to decide on whether they wish to apply jointly for such Acreage and the commitments financial or otherwise which they are willing to accept in relation thereto and no later than ten (10) days after the Deadline each of the Parties shall thereupon give notice to the other Parties of its commitment to participate in or to withdraw from each Consortium Bid agreed as aforesaid. Should a Party fail to give notice as required prior to the expiry of the time period set forth in this Clause 8.1, it shall be deemed to have elected to withdraw from such Consortium Bid. ==================