A View on the Ankara-Erbil Energy Partnership

http://www.newsnow.co.uk/A/648036853?-12497:5915 in the last 10mins A View on the Ankara-Erbil Energy Partnership Why Washington and Baghdad Did Not Have Any Reaction to Ankara-Erbil Energy Partnership A few hours before leaving Ankara for a historic meeting to declare a Washington-Ankara partnership against the Assad regime, Turkey’s prime minister, Recep Tayyip Erdogan, made a last minute announcement that Turkey will pursue separate oil arrangements with the Kurdistan Regional Government (KRG), in partnership with Exxon Mobil. Surprisingly, neither the US and nor Iraq condemned this partnership, despite it defying the central government in Baghdad. On May 14, 2013, before his flight to Washington, Erdogan made an announcement that shook regional dynamics. “Turkey’s state-owned oil firm will work with US giant Exxon Mobil to develop oil in the Kurdish-run area," he said. “We will develop our agreement with the regional government after our visit in Washington.” The US president and the Turkish prime minister had a historical meeting for the prospects of a region covering Turkey, Iran, Iraq, and Syria. The meeting agenda’s main item was creating a unified strategy for Syria’s future. By making a direct agreement with the KRG just before this meeting, Erdogan has, in a way, imposed on Obama a pre-condition for their alliance and partnership. “Countries from various parts of the world are taking steps to explore and produce oil in different parts of Iraq, and then deliver it to world oil markets. There's nothing more normal, more natural than Turkey, which provides all kinds of support and aid to its next-door neighbor, to take a step that is based on mutual benefit,” Erdogan said to journalists asking about the reactions of Baghdad and Washington-based parties. Turkey’s oil imports from Northern Iraq seem to have entered the Erdogan-Obama meeting's agenda at the last minute. Indeed, Turkey’s minister of energy and natural resources, Taner Yıldız, (who was not on the initial delegation list) abruptly joined the other ministers accompanying Erdogan. With this last minute resolution, Turkey has defied both Washington and Baghdad. US authorities have warned several occasions that they do not support any independent energy deal with Erbil, as Baghdad and Erbil have not yet resolved a long-standing oil and gas revenue sharing legislation feud. Besides Washington and Baghdad, Erdogan's announcement also seems to have broken a tacit agreement with the KRG, which had been considering the deal, too sensitive to be announced publically before Erdogan visited Washington. However, no reaction came from Turkey’s announcement. No American authority criticized Turkey for not following their advice, nor did any Baghdad authority warn of the unconstitutionality of the agreement, nor did any Kurdish authorities make a remark on the timing being proactive. Baghdad and Washington’s espousal becomes even more unexpected when one remembers that earlier this year, when the Turkish-British joint venture Genel Energy delivered via truck the first shipment of crude oil from the KRG's Taq Taq oil field to Turkey’s Ceyhan port on the Mediterranean Sea (where it was shipped to the international market), John Kerry, the US secretary of state, warned Masoud Barzani, the KRG’s president, against concluding an agreement with Turkey or any other state in the face of Baghdad’s opposition. Baghdad, on its side, called the KRG’s agreement unconstitutional and threatened to sue companies exporting crude from the KRG, warning them that they must choose between investing in the country's southern fields or in its KRG-controlled northern ones. Erbil’s silence can be analyzed in the context of its demand to the Obama administration for Washington to remain neutral in this dispute with the Iraqi central government. Baghdad’s silence, meanwhile, makes sense in the context of the breakthrough achieved over the last several weeks. Early in May Kurdish lawmakers returned to Baghdad, opened a new process for an agreement amending Iraq’s 2013 budget and formend a committee to study the oil and gas law. Iraq’s oil and gas law has been stuck in parliament for years due to a lack of consensus. Last Sunday, a delegation from the Iraqi central government, headed by Falih al-Fayadh, the country's national security advisor, visited Erbil. Both sides emphasized the need to continue holding negotiations to settle all pending issues between Baghdad and Erbil. Considering the meeting between Obama and Erdogan, the US seems to remains close to Turkey because the Syrian situation may have a priority over Iraq’s economic and politic unity for the US agenda. During his statement, Erdogan did not give the name of the state-owned firm which will spearhead efforts in the KRG, but various sources suggest the Turkish Petroleum International Company (TPIC), an arm of state-run Turkish Petroleum (TPAO), will enter a partnership with the KRG and Exxon Mobil to explore and develop hydrocarbons in Exxon Mobil's six untapped blocks in Iraqi Kurdistan. While penetration of the TPIC is a state affair, the Turkish-British joint venture Genel Energy remains today the largest producer for the KRG. Last month, Genel also announced making a significant oil discovery in the KRG’s First Chia Surkh field. Despite this success, Genel is still unable to easily export--it averages about 45,000 barrels per day in oil production due to disagreements between the central and regional governments. As the largest producer in the KRG, Genel Energy has already stated its interest in investing in a separate pipeline to connect KRG oil fields with Turkey, independent of any control from Baghdad. In this context, the Turkish government's cooperation with Exxon Mobil (which arrived in the region only in two years ago) over Turkey-based Genel brings a new dimension to the relation of private companies to the state in the region's energy diplomacy. Olgu Okumuş is an affiliated lecturer in energy diplomacy at Sciences Po, Paris and director of strategy development at LEO Advisors. She is also PhD candidate at Sciences Po, Paris, where her research focuses on Turkey’s energy transit policy. She can be reached at olgu.okumus@leoadvisors.com http://www.naturalgaseurope.com/washington-baghdad-ankara-erbil-energy-partnership ========= GKP's house broker seems keen to get their 15% recovery factor out there based on the 15 degree API oil from the Middle Jurassic Sargelu. If it is a Shaikan 'look -a-like' assumption then we know roughly where recovery factors will be for the FDP on Shaikan's Middle Jurassic. Recovery factors appear to be higher (as you would expect) for the better quality oil circa 25api to 30api as noted in previous zones. With assisted recovery techniques (electric pumps etc) they rates could be enhanced to double those rates imho. 300m column - there has to be more to that than just the middle jurassic. Come on Hayward - spill the beans. HUB ========= You wait for RNS's like buses and two come along out of the blue. Interesting choice of words from Genel regarding future work on the licence... “We plan to begin a phased development of the field in the second half of this year." END. I'm not sure I would have used the word 'development' - appraisal yes - even further exploration. Could just be a 'phrase' but the implications near term are that BB is back on Genel's work programme after being absent across most of their presentations. So why the u-turn? What's changed? Have the KRG and their new consortium of US and Turkish friends decided that BB is required to ensure volumes are met across the set of new pipelines? One thing is certain - GKP would not have budgeted for any cash burn on BB in 2013 based on Genel's previous work schedule. 40% of capex costs on 'development' could be large. Especially if you have plans to drill a very expensive deep well in SH-7. Can't help but think the 3rd bus to come along will be the funding type. If it does happen I can't see it being at sub previous ii levels of 140p. Might explain why Capital decided to load up at sub 140p? Still - it's an excellent problem to have. More oil. But for a company GKP's size the reality of bringing 4 x licence blocks into full field development looks less and less likely. Shaikan is too large as it is for GKP to go it alone. Throw in BB and SA and it gets ridiculous. Hence - something has to be farmed out or sold. And shaikan is almost wrapped up and ready to be packed off. Well, perhaps not until SH-7 hits the 5000 level. It's beginning to look rosey again. HUB ======== mmm - analyst meeting at present onsite at Shaikan. TK announcing corp governance and ceo/chairman split. mmm - anyone would think that GKP are looking to go cap in hand again. CBonds might be tricky to agree whilst production issues remain tight due to KRG / Baghdad power games. Anyone interested in some of those 100mln shares approved at last AGM? I can't see the Board getting agreement on a new batch if they haven't touched the last issue. Mates rates before CC judgement? Now that would be criminal. HUB ============== Ber Bahr Commercial Discovery Gramacho; It is very good to hear of a discovery at BB. However, 2100 bpd at 40% WI is not exactly stellar stuff compared with other discoveries nearby and adds only minimally to the asset base. I would have thought more wells would be urgently required to provide meaningful aggregates. No matter; I have a question that relates to your remarks on field development timing. It would be a reasonable guess that the oil quality is similar to Shaikan and therefore the thorny question of sulphur removal comes into play. Have you heard anything about preparations for connecting to Shaikan's PFs ( spur or trucking ) or for otherwise orders for the long-lead and expensive Claus units that will be required? If this issue is not addressed I cannot see how Ber Bahr can meaningfully affect GKP's production figures ( via truck ) any time before late-2014. renardargente = Renardargente, I'm extremely busy at the moment (and for the next week), so my apologies for missing your 9am deadline. However, this is to inform you that I am pleased to accept your challenge and will take the other side of your bet, provided that I am also allowed to make minor modifications as follows: 1. The pipeline does of course not actually 'export' until it reaches the Turkish coast at Ceyhan - so let's slightly modify your 'bet' wording to the complete line specification: 'Shaikan Jurassic crude will not be 'mixed' with Genel Taq Taq light crude in the Taq Taq->Khurmala->Fish Khabur->Ceyhan export pipeline within the next 3 years'. 2. The loser will pay £5000 directly to DB's wife (rather than DB's charity). For the avoidance of doubt, you say 'no', I say 'yes' (to mixing of crude en-route to Ceyhan). BBBS === Oilman....... Balance is great........ What's the sulphur content like at BB ? If it exists how can Genel go into phased development THIS YEAR with such long lead items ? If it does exist, why have they not had the forethought to advance purchase ( they are oilmen, experts?) http://www.iii.co.uk/investment/detail?code=cotn%3AGKP.L&display=discussion&action=detail&id=10632371 IMO There are experts......and there are experts Some are here to help, others appear to be here to unbalance logical thinking Jack ======== Kenetic: JG actually says between 60% and 80% RF from the Jurassic fractures system, which will be the lions share of the Jurassic in Shaikan, with some recovery coming from the matrix. He says this approx. 10 minutes into his presentation which you can find on GKP's home page. How much oil is there in the Jurassic system, 12bbls mean of the 13.7bbls that we know of? Average 70% recoverable from the fracture system? * 54.3% WI = 4.5bbls to GKP? Cretaceous / Triassic? I won't mention SA/BB toby ================= Re: MGW on Twitter - Ren->Bet->On View parent message Out yesterday but seems the BB was busy... So we had a poster asking MGW if Shaikan & TT =TaqTaq crudes would ever be mixed in the Kurd to Turkey pipeline. Ren discredits it and anyone who believes it. Offers Bet: Ren Wed 17.48: "I'll lay a bet with you now that Shaikan Jurassic crude will not EVER be placed in the TT to FK=Fish Khabur, Khurmala pipeline mixed with Taq Taq crude. Do you want to take the bet?" Ren Wed 19.58: "You were talking about the only known intra-KRG pipeline; TT( Genel )->Khurmala->FK . MGW understood your question and replied with the CERTAINTY ( i.e. 'will' ) that the pipeline would accommodate Shaikan crude; being GKP's only production, by the only means possible by mixing it with TTOPCO crude; i.e. 'the crudes mix' " Ren Wed 20.20: "I even offered the word 'EVER' to give the very best chance"; "I will even limit my bet to to £5,000 to reduce your exposure" Gets a bet back from JD about GKP SP but doesn't want to detract from the point he is trying to make: Ren Wed 22.23.:"I only 'make bets' on those wagers I consider certainties. I am however willing to take big risks that I have it right. For example; I am certain that MGW's statements are BS and those that claim otherwise are at best 'misguided'. "It is precedent and simpler. Their 'expert' has said that there is room for Shaikan crude in the Taq Taq pipeline and that the crude WILL be mixed. C'mon - £5k !!" Ren Thu 08.29: "That is; these individuals do not have the courage of their supposed convictions. I am very willing to modify the bet to any level of their expenditure to lessen your 'bully boy' concern. " Then yesterday after months of absence, BBBS reappears, accepts with the following caveat:

BBBS Thu 16.57: "1. The pipeline does of course not actually 'export' until it reaches the Turkish coast at Ceyhan - so let's slightly modify your 'bet' wording to the complete line specification: 'Shaikan Jurassic crude will not be 'mixed' with Genel Taq Taq light crude in the Taq Taq->Khurmala->Fish Khabur->Ceyhan export pipeline within the next 3 years'."

Ren then refuses the bet on the following grounds at 18.57: "It is a very long way way from MGW's original assertion reference Shaikan crude and the TT->FK pipeline ( the source of the original bet ) to what you propose. Do you agree with MGW that Shaikan crude will be mixed on-site ( approx ) with Taq Taq crude and transported by the TT->FK pipeline? Because that is what was challenged. Answer please because you apparently did not want to take this original bet. An entirely different one is what you propose now of course and I am disappointed that you are underhand enough to submit it. Why stop at Ceyhan? Customs facilities are at borders for a reason - that is where exports occur unless there are bonding arrangements in-country" So sticking to the facts and the posters own words it appears to me that the pipeline has the following route for this new (& not yet complete) oil pipeline path to Turkey TT->>--XX->->-KH->->-YY->->-FK-WW->->-ZZ->->->-CY where TT is TaqTaq, KH is Khurmala, FK is Fishkabour, CY is Ceylan and XX & YY are potential or actual feed-in sites in Kurdistan and WW & ZZ the same in Turkey. So the original question was whether there would be mixing of Shaikan crudes into the TT to Turkey pipeline which Ren set a bet was completely untrue and BBBS took up the bet saying it would be true but clarified that by Turkey he meant the specified end point of this export pipeline (Ceylan) not simply where it crosses the Turkish border. IMO BBBS modification makes sense for several reasons: - export Crude is paid for on delivery in Ceylan (with transit fees to Turkey) NOT paid for simply getting it to FK. It is simply metered at FK. - the pipeline on the Turkish side is actually made up of at least two pipes (one needs repair) - we have previously heard that the export pipeline might be two different blends, one of which would contain a mix of heavy crude with lighter crudes - the heavy crude pipeline (for Shaikan oil) will likely be built to head straight towards Turkey so would never get mixed at TT but likely blended at a more geographically appropriate location. - as highlighted by the Platts Blog I put up yesterday (which Ren commented on as important), for various legal & political reasons, it may be necessary to have new Kurdish feed-ins to happen on the other side of the Turkish border (ie WW on my path above) So if I have understood correctly: - BBBS is saying there will be mixing of Shaikan heavy crude into the export pipeline somewhere along the route (but maybe be as late as point WW). - MGW said there would be pipeline mixing which Ren disputes in his Wed 17.48 bet. - Ren refused the bet as too different and now alleging it concerned mixing crudes at TT With all due respect Ren I don't see BBBS' clarification as modifying the bet as I know you are fully aware of the intricacies and to use your own words it was a simple bet about Shaikan crude being mixed into the export pipeline. You showed willingness to accommodate on amounts, adding side bets but did not want to distract from the main crux of the debate: crude mixing which is fair. So I see no difference in what BBBS proposed. Your bet was taken up in less than 24 hours which for many who only have time to check the boards once a day (some even less) seems fair. We all know where BBBS habitually resides and likely only is able to read the BB in UK mid afternoon time so he never would have been able to meet your 9am timeline. It appears you are backtracking to a crude mix point of TT as justification for your rejection but that was never mentioned by anyone so it does appear that you are backing out of the bet for a purely arbitrary missed deadline that was likely either impossible to meet by the few with the knowledge and deep pockets to meet your bet and if you truly believed it was a "certainty" (your words) then surely a few hours (less than a day remember) wouldn't make a difference. Especially as you must have known those with the knowledge to confidently answer (and with a high bet) do not have the time to sit on the BBs 24/7 answering every post that concerns them. The 120 to 6 post ticks should indicate what most of us think of this bet and you are seriously undermining your credibility by the way you have backtracked. KKO PS: I can't believe you brought DB into all this and then back out on an arbitrary technicality. =============== Author Bah Bah Black Sheep 2013-02-20 11:43 Re: BBBS RNS View parent message Hello MARKETCHASER, regarding "if you're out there and I suspect you are, do you fancy giving us your interpretation of todays RNS", my flippant answer would be 'put GKP on ignore' - and 'read the MOL Operational Update': http://ir.mol.hu/en/operational-update-kurdistan-region-iraq-%E2%80%93-oil-discovery-bakrman-well-akri-bijeel-block/ How times have changed! Three and a half years ago we were all accusing MOL of being 'the silent one' who seemed quite happy to put the occasional boot into little old GKP (remember the Shaikan-1 sidetrack 'issue' and their down-playing of Shaikan significance?). Today's RNS from GKP is an abysmal precis of the MOL update - several significants pieces of information are omitted, and I would even go as far as to say that the current and future testing plans on Bakrman-1 (the discovery well) have been mis-represented. IMO. The most glaring omissions by GKP are discussed further below: Bakrman-1: - GKP only specified results for the Second Open Hole test, and even there they could not be bothered to give a rough translation on the gas flow rate (I believe some posters have already queried this aspect). The answer is found in the MOL Update: "the Second Open Hole test of Bakrman exploration well resulted 2,616 bbl oil and 5.86 MMscfd (1,070 boepd) gas inflows." There you go - 5.86 MMscfd translates to 1,070 boepd. - GKP totally ignored the information provided by MOL concerning the First Open Hole test: "First Open Hole test was done in interval 3,811-3,932 m MD (measured depth) Kurra Chine A and B zones where total mud loss took place during drilling. The test produced 1464 bbl/d water with N2 lifting". This First Open Hole test was conducted ABOVE the Second Open Hole test - over an interval that comprised both Kurre China A and B (as opposed to just the Kurre Chine B for the Second test). It seems very strange that the deeper Second test recovered oil and gas - with no water - in the Kurre Chine B, when the First test produced just water over an interval that also included the Kurre Chine B. Actually, it's not very strange at all, the key words being "where total mud loss took place during drilling" - the produced water is most likely none other than the fluids that were lost during drilling. IMO. Holders of Shamaran will know that this would not be the first time that 'water tests' can be deceptive in a fractured mud loss setting (compare results from Atrush-1 and Atrush-2). I would imagine that MOL will be evaluating these results further. - GKP's RNS is mis-leading with regard to the fact that many more well tests are yet to be made at Bakrman. GKP merely states "The well testing programme is ongoing and is expected to be completed in April 2013". Whereas the MOL Update is quite specific with "Five further tests (one is optional) are planned in the well and the program is ongoing till April 2013". A massive difference (IMO). They are now performing Cased Hole tests, so these will be 'bottom-to-top' in the well. Consequently, the three unsuccessful Cased Hole tests to date (MOL: "Three Cased Hole DST have been perforated till now. There was no oil inflow some traces of gas and H2S were experienced.") would have been in the Lower Jurassic - most likely Butmah Formation - which is known to be less productive than the Upper Jurassic (refer Shaikan, Atrush etc). The main point being that there are still FIVE MORE TESTS TO GO - and at least some of these will be over Formations that are known to exhibit better flow properties in adjacent properties. Bijell-3 (Aqra-1): - The well title used by MOL (as above) as opposed to simply 'Bijell-3' by GKP already says a lot. The well location is some way from the original Bijell-1 discovery well; indeed it sits on the side of the Aqra anticline. GKP also omit a very pertinent remark that is stated twice within the MOL Update: "Bijell-3 appraisal well, which was the riskiest from a geological point of view in the planned appraisal program, moreover, it is the farthest one from the Bijell-1 discovery". I despair when posters like Hub just take the GKP RNS and then immediately write-off the entire Bijeel discovery as 'pants'. It would appear that even Zengas only read the GKP precis and not the source MOL document. In conclusion with regard to GKP's Akri Bijeel Update, they are clearly disinterested in 'current values' - there is still much more testing to do on Bakrman alone before the full extent of this latest discovery is known. And much more information will also be known on the true extent of the Bijell structure - 'soon' - at least within 2013 with four more wells going down. What was that previous carp about bringing in PW to sell AB about Todd? AB is far too valuable - to the buyer of GKP .... IMO. As for GKP's belated update on Shaikan activities? Yes, more of the same minimalist carp. IMO. Would it be so hard to say why SH-6 was dropped and SH-10 added for PF2? Why do PI's have to guess - that perhaps SH-6 was drilled too far down on the flank (in order to try and define OWC's that so far only Joseki has told us about) and is consequently unsuitable for a Production well that should ideally initially withdraw reservoir fluids from the top part of the structure? When are we going to get test results from SH-5? When are we going to get test - and OWC - results from SH-6? I guess we will just have to rely on Joseki's report on what the Institutions were told on 28th May 2012 - you know, that post which was deleted by iii without any explanation to the author. At least it was good to note that the latest production promises are now verifiable within a rather short period of time ... over to you Hawrami - is the Turkey nearly done? And another reference to the 'synergy' word when talking about Sheikh Adi and Shaikan ... nice. With ExxonMobil due to spud Al Qush-1 'imminently' (refer Western Zagros 'internal' map) there may be some more use of the 'synergy' word in the not too far distant future ... (please do look at that map, and note the alleged boundary of Shaikan compared to the shape of the SH-AQ anticlines). Maybe Al Qush-1 has been re-named SH-9 ? GLA, BBBS P.S. KRG rules - but Turkey over-rules - in more ways than one. That'll be 'that' post again ... one day .. maybe 'soon'. ==================