Genel's Tony Hayward says Iraq's Kurdistan
oil row too big to last
September 8, 2012
Genel chief executive Tony Hayward said the company
was making progress across all areas of its
business. Photo: AFP/Scanpix.
See Related Links
Kurdistan region 'Iraq',— Iraq and its Kurdistan
region both have too much at stake not to settle
their dispute over oil, although they may take a
year or so to do it, the head of the largest
producer there said.
"The scale of the opportunity for Kurdistan and for
Iraq is so large that there will be a resolution,"
Genel Chief Executive Tony Hayward, former boss of
BP, said in an interview.
"Over the next year or two, Kurdistan production
capacity will grow towards 1 million barrels a day -
that's too much oil to be shut in as a consequence
of a political dispute. So one way or another, it's
going to get resolved."
Kurdistan's oil can be shipped to world markets
through a Baghdad-controlled pipeline from Kirkuk to
the Turkish port of Ceyhan.
The Kurdistan Regional Government (KRG) halted
exports in April in a dispute over payments from
Baghdad to companies working in the region. It
restarted them, but warned it would cut shipments by
mid-September if there were no progress on payments.
"We'd like to be exporting and believe strongly that
over the next year or so, if not well before, that
resolution will be arrived at," Hayward said in the
London-listed oil explorer Genel, the first to
arrive in the mountainous region, has complained
that it has not been paid for the majority of oil
exported in 2009 and 2011. Other operators have
voiced similar grievances.
But Hayward said if exports were to stop, production
from the Taq Taq and Tawke oilfields - where it is
involved - would be sold into the domestic market.
That local business - which fetches about $60 a
barrel, well below that on world markets - would be
enough to keep both projects in the money. "Very
much so," he said.
Taq Taq is now pumping 105,000 bpd. Tawke is running
at 70,000 bpd, but should be up to 100,000 bpd by
the end of the year.
Baghdad says it has the sole power to export oil.
But Kurdistan has signed exploration oil deals with
foreign companies, contracts Baghdad says are
Taq Taq and Tawke are the backbone of KRG exports,
between them contributing roughly 80,000 barrels per
day of an overall 120,000 bpd. Khurmala,www.ekurd.net
the northernmost part of the giant Kirkuk oilfield,
makes up the remainder.
A new pipeline linking Taq Taq to Khurmala - the
entry point to the Iraq-Turkey pipeline - is
expected to be up and running by October, easing
delivery of the oil to world markets. Crude from the
field is now transported by tanker trucks.
"If there's an agreement between Baghdad and Erbil
to continue exports, then Taq Taq will be tied
directly to the export infrastructure," said
In the meantime, KRG energy minister Ashti Hawrami -
aiming to reduce the region's energy reliance on
Baghdad - is carrying out plans to export oil and
gas directly to Turkey, just to the north.
Apart from its oil plays, Anglo-Turkish Genel - its
longer term sights on Turkey's gas market - is also
building up its position in Kurdish gas. It splashed
out $450 million last month on a stake in the Miran
gas discovery and also acquired a piece of the Bina
Bawi gas discovery.
"The Kurdistan Regional Government has made it very
clear that they would like to see gas in Kurdistan
exported to Turkey, so building a gas business in
Kurdistan focused on both the domestic market in
Kurdistan but also the Turkish export market makes a
great deal of sense," said Hayward.
Genel spent more than $700 million last month to
bolster its position in Kurdistan. Hayward said the
company could take on more, but acknowledged that
options were now limited.
"If we see opportunities where we can create a lot
of value, then we'll continue to add," he said. "But
there's been a lot of consolidation in the course of
the last nine months and the opportunity set is
The Genel chief has also been trying to diversify
the firm's sources of oil, recently taking acreage
in Morocco and Malta. It has earmarked around $1
billion to buy further assets.
"We've said we'll focus on the Middle East and
Africa and that's what we're doing," said Hayward.
Genel was formed last year when Hayward and
financier Nathaniel Rothschild's bid vehicle bought
Turkey's Genel Enerji.
In Kurdistan, Hayward expects to see further
consolidation. Oil majors Chevron (CVX.N), Total (TOTF.PA)
and Gazprom (GAZP.MM) have joined Exxon (XOM.N) with
their own deals in there, provoking warnings from
Baghdad that those with oil deals with the federal
government might be at risk.
"The supermajors have moved in - we haven't got much
room for many more, frankly," he said.
"We'll see further consolidation and the emergence
of half a dozen serious operators - of which Genel
will be one."
By Peg Mackey, Reuters
Copyright ©, respective
author or news agency,
does not take credit for and is not responsible for the
content of news information on this page