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Ex BP Chief to spur a takeover frenzy in
Iraq's Kurdistan Region
12.7.2011
By Shwan Zulal - ekurd.net |
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July
12, 2011
It has been reported in the Sunday Times that former
BP boss, Tony Hayward, and his investment vehicle
Vallares, which he has set up with Nat Rothschilds,
have made a move on the Turkish Genel Enerji. Since
leaving BP, Hayward's fund attracted many inventors
including BlackRock, Paulson and Co Hedge fund and
Mubadala among many others.
Mr Hayward told FT in June: "Vallares will not use
the capital it raises to buy assets for cash
“because we have no competitive advantage in doing
that”. Instead, the company will target an emerging
market player with “good quality assets that have
neither the capital nor the capability to move them
forward but by the same token don’t want to sell
out”.
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Tony Hayward, the former Chief Executive of oil and
energy company BP |
The Guardian has reported that Vallares is seeking a
reverse takeover of Genel Enerji which one of
Turkey's largest oil companies, and has a strong
presence in Kurdistan Region.
The company has been
keeping a low profile since the UK regulator has
fined its Boss for insider dealing when the company
was in merger talks with UK based Heritage oil.
The fact that a fund like Rothschilds and Hayward's
are considering Kurdistan is a confirmation that US
and European investors have started to look at
investing in Kurdistan Region favourably. It is over
eight years since Saddam Hussein was toppled from
power and oil exploration companies have moved to
explore the largely untapped Kurdistan Region of
Iraq. Nevertheless, the oil majors have so far
stayed away from the Region with few exceptions due
to doubts about the legality of the PSCs and PSAs
awarded by the Kurdish Authorities and fear of being
excluded from the auctioning rounds in Baghdad.
Chinese and South Koreans state oil companies along
with smaller western oil explorers ignored these
fears and nearly 40 companies are operating in the
Region today. Many have been successful and found
significant hydrocarbon reserves. The companies on
the ground and investors willing to take risks could
not resist the commercial terms offered by Kurdistan
Regional Government KRG on
the oil and gas contracts. The move by these
companies were very risky at the time but they are
about to be awarded as it becoming clear that the
Kurdish authorities are not willing to bow to
Baghdad.
While at BP's helm, Hayward must have come across
this issue and BP must have researched the
possibility of entering the Region at one point.
Nevertheless, After his abrupt departure from BP,www.ekurd.netHayward has set up Vallares to invest in emerging
energy markets and has made its move to Kurdistan.
The fund is already oversubscribed according to
Bloomberg. And it is not a surprise that they
decided to look at Kurdistan as it is the most
important onshore untapped energy source, which
could play an immense role in future European energy
supplies.
Vallares takeover is at the due diligence stage at
the moment according to Sunday Times and it is
reported that Hayward-Roshcilds duo are looking at a
number of other oil explorers in Kurdistan Region.
If Vallares manage to enter the Region successfully,
it will open the door for more activity and will be
a boost for risk averse investors' confidence.
Many of the companies involved in Kurdistan Region
are smaller exploration companies and have neither
the resources nor the expertise to build up the
underdeveloped infrastructure. Therefore, it is
inevitable that a large number of them would be a
takeover target for the larger oil companies and
Vallares move has set the pace.
The arrival of Hayward would commence a race among
investors to take part in a new emerging energy
player in the region. It is inevitable that in the
coming months, we will be seeing much more activates
in Kurdistan Region as mergers and hostile takeovers
ensue.
Hayward's CV is impressive and he understands the
Energy market more than anyone else does. He has
chosen one of the most strategically important
companies in Kurdistan as the company holds seven
licences and is Turkish owned. Turkey is a big
player in the region and positioning itself to
become the alternative energy supplier for Europe
and the region, which Kurdistan Region can play a
big role with its oil and gas reserves. Moreover, a
number of the blocks Genel holds are close to the
Turkish border and it is immensely important to the
Turkish government for strategic reason.
KRG would be chuffed at the news as the long awaited
momentum has been building recently. First, the UK
consulate has opened in Erbil and the US followed.
And now, first class investors are showing the
wiliness to invest in the Kurdish energy sector
which would lead to attracting more investors in
other sectors.
Shwan Zulal
is a Kurdish Blogger, a regular contributing writer
for ekurd.net, interested in political and legal
Reform in Kurdistan, KRG, Iraq and current Kurdish
affairs, including oil exploration companies and
relevant legislations. You may visit Zulal's website
at http://kurdishviews.blogspot.com/
Copyright © 2011 ekurd.net
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