Baghdads empty legal threats reflect weakness

Over and out for me. This is my last post on this board. Best wishes to all in GKP. I hope that everyone gets £8-£22 / share and that there is then the mother of all takeover parties. s_k Some interesting pictures of Erbil in this article: http://en.chessbase.com/post/boringly-safe-in-kurdistani-iraq-part-1 ================== Author Elikkos Georghiades View Profile Add to favourites Ignore Date posted Thursday 23:45 Subject Votes for this Posting Voted UP 87 times. Message Lets be clear about this so called threat from Baghdad. First, this is a threat directed at Majors who might be interested in buying the exported pipeline oil. It most certainly is not a threat directed at any company selling the oil. Indeed, as others have pointed out, the oil is not theirs to sell and in any event it would only be exported via the pipeline on direction of the lawful owners, namely the KRG. Interestingly, for all the constant and persistent accusations of "illegality" from Baghdad since Maliki came to power, Baghdad have never taken any steps to obtain a legal ruling from any European or for that matter, any court, upon the validity of their claims. "The central government threatened to sue over the shipments in a long-running dispute.... but it took no legal action". And its even more interesting now that this matter has escalated and come to a head, that they direct what they claim are legal threats, at Major buyers of oil and not the KRG sellers, with whom the real issue of legality exists. "Interesting" is perhaps the wrong word....."hardly surprising", would be more appropriate. Would /could Baghdad institute legal proceedings against the KRG in any other foreign jurisdiction and run the risk of losing their longstanding claims against the KRG. ? They undoubtedly have their own lawyers to advise them and (from my own legal research into the issue) they would doubtless have advised, that their claim is anything BUT strong. From my own research into the Iraqi constitution, I understand that, in essence the KRG contends that Baghdads claims to sole rights of export covered only existing discovered fields at the time of the constitution, and not the new oilfields like Shaikan that were discovered subsequently. Moreover, there is a constitutional basis for the KRG's contention. Secondly one might well ask if this is in reality a "LEGAL" threat? I categorically and unequivocally say NO. REASONS 1) There is no such thing as hiring a law firm to "TARGET" a buyer of such illegal oil export. What exactly is meant by "target"? Moreover, what does the anonymous Iraqi official mean by "Iraq's oil ministry instructed legal firm Vinson and Elkins about two months ago to pursue anyone who buys oil" ? A threat is only legal, if one intends to use a court of proper jurisdiction to enforce ones claim. For Baghdad to legally enforce a claim that the buyer has bought illegal oil belonging to Iraq, it needs a court to enforce its claim that the purchase was illegal.. Indeed, a defendant buyer of such oil would, contend in that same court that it bought the oil from the legitimate owners, namely the KRG. There would then have to be a ruling on Baghdads prnicipal claim that PSC contracts are illegal......which is most certainly NOT what the Iraqi goverment wants. So I am not in the least bit surprised to read that "Vinson and Elkins, which has represented the Iraqi government in the past, declined to comment." There is of course the other small matter, that any legal action instituted by Baghdad would take a very long time before it was heard by which time Maliki and his band of not so merry men could have long gone So what is Baghdad really trying to do with these threats. In short they are picking on what they consider to be the weakest link in this dispute and trying to frighten them into believing that Baghdad will take legal action if they buy the said oil. " "Instead of going after the KRG, they are going after people who will lift oil from them" However, the real threat is one of blackmail rather than "legal" and will only work if the oil major has other oil interests in Baghdad which it does not wish to risk losing. That is indeed why, " Executives from oil majors have said they won't touch KRG crude before the Kurds and Baghdad reach an agreement for fear of losing larger contracts with the central government. However, I entirely agree with other lawyers when they say that " Baghdad would struggle to make a case stick and any litigation would be complicated by questions of jurisdiction, but the threat could deter companies reluctant to deal with the negative headlines." It is indeed just the threat which is intended to deter companies from buying the said oil. But the threat is empty for it is devoid of sanction and is therefore toothless. If for the purposes of argument, a company like Exon or Chevron were to buy that oil, it would be interesting to see how Baghdad would respond. In my opinion it would NOT. Assuming the accuracy of these reports |I think its a great pity that the KRG have promised not to go ahead with exports until agreement with Baghdad is reached. By building the pipeline, they have skilfully and successfully brought this whole thorny problem to a head and now of all time, when the opposition are at their weakest (with the pending Iraqi elections), is the best time to force them to come to a resolution. Now is most certainly not the time, to make promises not to export the oil until its resolved. Equally, its very unfortunate that Turkey, deems it fit to couch its response / position in ambiguous terms, i.e. " to seek the central government's permission, but not its blessing, in exporting KRG oil." If the KRG, Turkey, and any potential Major buyer of the oil, remained resolute against Baghdad's empty threats, what on earth could Maliki's government do ?.....Absolutely nothing!!. And that is exactly what would guarantee that Maliki is not re elected, for he will be humiliated in the eyes of the sufferring Iraqi electorate. And this is also precisely why Maliki would (in that event climb down), even before the April elections and be forced into arriving at an agreement which by implication recognises the legality of the KRG's position. Then and only then could he if needs be, count on the KRG's support to return him to power. Elikkos ========================== "Boringly Safe" in Kurdistani Iraq! Part 1 by Alina L'Ami 12/25/2013 – The ever adventurous and fearless globetrotter Alina l'Ami has recently finished a tournament in... Kurdistani Iraq! Specifically the tournament was the second Kurdistan Chess Festival held in Erbil, Iraq. Several strong players were not put off by rumors of danger zones or by the unusual location and enjoyed a magnificent and unique experience. Alina brings us a beautiful report. “So what is your next tournament on the agenda, Alina?” “2nd Kurdistan Chess Festival, in Erbil”, I reply with enthusiasm. “And where exactly is that?” “Well, in Iraqi Kurdistan.” “Iraq??? Are you completely out of your mind?” Years of experience have taught me that being a true globe-trotter requires a multi-faceted preparation before any new trip. In the beginning I thought things were simple: you step into the airplane and after arriving at your destination, you let the place unfold its own and unique story. This approach was not out of laziness; I was convinced this is the best way of perceiving the reality without being influenced by the others’ (travellers, friends, columnists) opinions. My flight to Irbil is ready for boarding...so many emotions I had, what should I expect, will it be safe, will it be as nice as I imagined?! For now, it seems I did my homework well enough: 2 degrees at destination, so my warm coat will be of good use:) Gradually, I understood that so many times I didn’t get any wiser by using this kind of “system”. It is advisable to do some preliminary research before departing to a remote and unknown place; otherwise you might just look at things without really seeing or hearing anything important. You will not get the story the place is telling you without a bit of earing in and a gram of loving... And to get ready for it, you definitely need to know a bit of what you should expect and what to be focused on when looking around. My recent travelling to Irbil, in the Iraqi Kurdistan, is an excellent proof that doing your homework before departure actually helps you avoiding prejudices! The process started somewhat under the pressure of my self-preservation instinct, which proved a fair counter-weight to my usual pleasant creeps whenever I feel there is some challenge involved. But maybe my adventurous spirit would have prevailed had it not been for the members of my family, who under no circumstances would have let me go without proving them I was going to be safe... The view from my room - typical for such destinations: endless number of antennas! The entire region is developing very fast and in fact, we were not really in Erbil but in Ankawa, in the outskirts of Arbil . You will see in the upcoming photos the contrasts - fascinating life style! More carpets displayed in a rather unorthodox manner but much easier to decide: you can touch, you can look, you can easily find what you want to bring back home. Kurdistan enjoys a certain degree of autonomy. For instance, I would have needed a Visa for Iraq, but I was not required one for the Kurdistan region! Still, it is not a country of its own, being part of Iraq; moreover, it is placed not really far from the border with Syria and rather close to the area of conflict between Turks and Kurds, not to mention several other issues within the neighbourhood... From far, it sounds like trouble! Wholesale district All these determined me making a more thorough research than ever before stepping into this new adventure. I checked and double-checked every detail and the result was simply astonishing! I was and still am amazed by the beauty of the Kurdish culture! Kurdistan enjoys enviable safety; over the last ten years there was almost no terrorist attempt, no bomb exploding or suspicious cars... This is quite different in Baghdad especially or Mosul and Kirkuk, where dozens of bombs fall daily… In some parts of Iraq it is customary that people go to work in the morning without knowing whether they will return home safely in the evening, but although Kurdistan belongs to the same country, what Kurds have accomplished here is a model worth following. Alina l'Ami in an outdoor exchange office... would anyone leave their money unattended in any European City, or displayed like that? At first, I was a bit confused about the numerous spellings of the name of Kurdistan’s capital: Erbil, Irbil, Arbil, Hawler. But later, this became a revealing detail: the former three are explained by the different Arabic languages, while the latter, used by the Kurds, speaks about the individuality of the place and its people. Indeed, there are millions of Kurds of Turkish, Iraqi, Iranian and Syrian provenience, who don’t have a proper state of their own; Iraq is the only country where there is a clearly defined, although not completely independent, Kurdish territory. Tobacco sellers were abundant in the streets Street food: delicious! Not to mention that if I was looking at it just for one second, I was inevitably invited to taste...such several stops in the market and soon I would get myself into trouble! This one is some sort of vegetable which is eaten with salt; and the juice is very good for your throat, which was more than welcome in my case, since I got a terrible cold. Some of the most delicious recipes one can find not in the fancy restaurants but...right on the streets! This is called "Kuba" and it has meat inside; but to be honest, I was more interested in the warm hearted locals, who were rewarding me with their contagious smile Erbil/Hawler is reported to be one of the oldest continuously inhabited city in the world, with more than 6000 years of existence. In 2014, it will be the capital of tourism in the Arab World, overtaking such popular destinations as Dubai! I only wonder if the European tourists will manage to win the inner psychological battle with their stereotypes and fears... I know this is not simple and I confess that convincing my family about the safety of my endeavour was easier than... getting peace of mind for myself! Even after collecting all the encouraging information, I spent two sleepless nights (or maybe more): could I be sure I was not heading straight for trouble? the heart of Erbil: very modern, isn't it?! Certainly not what I expected Souvenirs, it is hard to come back empty handed from this place Soon after making up my mind, I discovered how tiring it was explaining again and again to my friends how safe it was going to be. I could feel the disbelief and well-intended worry in their eyes and voices, as well as the conviction that I was the same irresponsible girl hunting dangerous adventures! Therefore, I started avoiding getting into detail; words like Iraq or Syria became taboo and I was just telling to my friends that Kurdistan is somewhere near Turkey! Later I found out that some of the participants of the Second International Kurdistan Chess Festival went even further. They told their families that they were going to play a tournament in…Istanbul Well, I am sorry if this article will spoil their under-cover strategy! The Kurdish flag's day: I was very very lucky to get this photo and the previous ones as well, with the overview of the center. Normally, because of the restoration works, this part of the citadel is closed to the public. But the guards simply allowed me to enter! Can you guess what is the white stuff the man is selling? I bet you won't... It is Kurdish chewing gum! A group walk in the parks of Erbil, which are surely better in summer time. There was another, not essential, but still important, prejudgement which I felt sorry to dismantle. I was hoping to trick the European winter once again, but I found out that the temperature in Erbil was lower than in many parts of the old Continent! But, as I mentioned before, I did my homework: I knew it was going to be cold, so I was ready;) The Kasparov family: "you are my queen" - say the eyes of Sergey! My first morning walk on the local streets was enough to make all the fears vanish and prove in the most concrete and suggestive way that within the clearly marked territory controlled by the Kurdish Regional Government and guarded by the Kurdish Security Forces life was absolutely safe. Well, it would be better not to say 100% safe, things might happen to you, such as a slip on the stairs, but you are not safe from it in day by day European life, either; at least here you would get a multilingual warning, including highly non-conformist English! Adriana Nikolova and Sarunas Sulskis A meal for...one! Kind of intimidating if you ask me! Good luck Georgi Zhivkov (our International Arbiter from Bulgaria), in finishing that! Everyone was surprised by the quality and the size of the plates...here he is with Adriana Nikolova and one of the organizers from the Khanzad Chess Club - Bakhtyar. To some visitors the numerous police patrols, military uniforms, safety control points at the entrance in the very modern shopping malls and other buildings or simply on the streets, would create an undefined feeling of danger. Security measures are necessary, though, in the surrounding generalized tragedy. And the result is outstanding! As a European woman I didn’t feel any shadow of danger, harassing or insecurity! On the contrary, I would define the place as...‘boringly’ safe!! We have been spoiled in Kurdistan... For the first time in my life I felt that I didn’t need to worry whether I forgot my purse open. The species of pick-pockets and thieves seem to have been exterminated here. Big bulks of money (summing up to the equivalent of more 100.000 Euros) can be seen on tables placed in the bazaars or straight on the street. It is also quite common that the owner of these improvised exchange offices leaves the money unguarded while taking a tea break in the neighbourhood. Would you try such an experiment in any of the European capitals?! Fellow globetrotter Sergey Tiviakov is not shy to get what is his My scarf didn't serve any religious purposes, it was simply very cold, despite the delusive sun. Interesting architecture for a church, Babylonian style. In the foreground Dutch players Sergey Tiviakov and Alina l'Ami A beautiful mosque, which I didn't have time to visit. But I promised to return! The next part of the report will focus on the tournament and will include many more experiences by this globetrotter in Iraq! Official website Results Alina L'Ami Feedback and mail to our news service Please use this account if you want to contribute to or comment on our news page service ==================== LBO, allow me to take the opportunity whilst you are here to refocus on matters more to hand: 1. Do you know if TK reviewed the Edison note before it was published? 2. Do you conisder the Edison note to broadly be in line with GKP's current outlook, as to plateau targets, likely oil price for sales, the amount of and source of funds required for 2014 etc? 3. Why was the Edison note timed for release just before the High Court judgment? s_k =========== miny, You are right in saying that Todd's first priority is to make himself richer. But, what if he realises that £8 / share is fantasy-land for current (rather than future) valuation purposes. After all, that is the message coming out through Edison. And what if he realises that he is fairly close to the door. Remember, shareholders managed to secure the exit of under-performing directors in the run up to / at the last two agms. No guesses as to whose head is on the block next as some have suggested; whether you believe such an act to be just is irrelevant, the issue is whether such a move is likely. What options does Todd then have? The long term one of awaiting SH7, pipeline etc. is just a pipe dream for him at the moment, is it not? This is just too far away and current funding will not stretch long enough to get there. The short term options are to secure a deal that shareholders will accept, very soon. But is such a deal, one acceptable to shareholders, likely to come to fruition in the next very few weeks? Possible, but I am doubtful and would not rely upon such a possibility. Absent this, I suspect that Hub is right, namely that funding may come with the price tag of Todd's head if dilutative (whether immediately or by conversion), as an egm will be required. What then for Todd? Go quickly / quietly, or draw things out / go noisily? And what are the consequences thereafter of Todd going? These are to me the questions that I am asking. ============== I have just re-watched Ewen’s presentation from the Investor day and especially the section from about 2 mins 55 seconds in for the following 2 minutes or so. In it, EA actually refers to his projection of an “annualised average of 8500 barrels per day from Shaikan” explaining that this would be the average figure taken across the whole year. He then proceeds to describe how this will be achieved, citing 5000 bpd in July, 10000 bpd in August and increasing to the targeted 20000 bpd for PF-1 in October, in effect increasing production by 5000 bpd every month… and then carrying on the same way with PF-2. While his commentary is slightly inaccurate in places, for example in that he then anticipates 40000 bpd at the start of 2014 (should be 35000), it is very clear to me that GKP’s target is to add 5000 bpd of production each month until they to get to the proposed 40000 bpd for PF-1 and PF-2, and use the constantly increasing revenue stream to then continue to grow production at much the same rate thereafter. In essence, he was saying that production in H2 2013 was projected to be:- July: 5,000 bpd (ie 150,000 barrels produced) August: 10,000 bpd (i.e 300,000 barrels produced) September: 15,000 bpd (i.e 450,000 barrels produced October: 20,000 bpd (i.e. 600,000 barrels produced) November: 25,000 bpd (i.e 750,000 barrels produced) December: 30,000 bpd (i.e 900,000 barrels produced) The projected total for H2 2013 was therefore 3,150,000 barrels = 525,000 barrels per month = or about 17,000 barrels bpd… or, on an annualised basis, 8500 bpd. As Finance Director, EA would simply have provided ‘projected’ figures based on the information available to him at the time, and no doubt assuming the anticipated levels of production contained in the Shaikan FDP. Whether those projections have actually been met or there have been any operational delays or restrictions caused by the ongoing political saga, I have no idea. But I see absolutely no reason for anyone to doubt that the ‘plan’ was very reasonable, and clearly outlined by EA at the Investor day. To me, his figures make total sense. And yes, it would have been good from the point of view of investor reassurance for us to have seen an RNS by now detailing exactly how GKP is doing in respect of those projections. But it is perhaps worth noting that the Investor Day was on 4 July 2013 and we should be receiving the latest operational update together with the interim results on Thursday 19th September, not much more than 2 months later. Not really all that long to wait, I reckon, especially when you think how long it took to finally get rid of Excalibur! While I understand that DNO provide MONTHLY updates on their levels of production in Kurdistan, I am not so sure that the same applies across the board of Kurdish operators. So, I would be inclined to give GKP the benefit of the doubt, especially as they now have a large quota of NEDs to ensure that they adhere fully to industry standards, whatever they might be! How frequently, for example, does Genel update their shareholders on their production levels in Kurdistan? My impression is that their operational updates have never been particularly frequent, and I don’t believe there are too many people complaining. Anyway, Thursday’s update should certainly be very interesting in many ways, and I rather wonder if today’s rise was partly in anticipation of positive news. We will see. AIMHO and please DYOR GLA, scaramouche ==========