Genel Energy, the London-listed independent, is doubling down on the Kurdish region of Iraq, despite a renewed ban on oil exports arising from deteriorating relations between the central and local governments.
Former BP CEO Tony Hayward’s firm has taken a 23% stake in Bina Bawi, a field which lies next to Genel’s core Kurdish asset Taq Taq, by purchasing A&T Petroleum Company, a subsidiary of Petoil Petroleum and Petroleum Products International Exploration and Production. Genel has disclosed the deal cost $175 million.
The Bina Bawi block is operated by OMV, the Austrian oil and gas company part owned by Abu Dhabi’s IPIC.
Genel said the first well drilled on the block in 2007 on a large surface anticline Bina Bawi-1, had encountered significant shows of 35-degree API oil while drilling through the Cretaceous zone and tested 6 million standard cubic feet of gas a day in the Triassic zone.
The third well, Bina Bawi-3, completed recently by block operator OMV on the same structure, had encountered a gross hydrocarbon column of more than 800 metres in the Jurassic zone. Two Jurassic reservoir intervals tested separately had achieved an aggregate flow rate of more than 4,000 barrels a day of light, 44 to 47-degree API oil.
The company is currently producing 41,000 bpd from Taq Taq, and like other firms in Kurdistan is prevented from exporting its oil via Iraq’s export pipeline to Turkey by the regional government, which declared a moratorium on exports in frustration at a lack of payment by Baghdad.
As south Iraq’s exports via Basra have increased, the impetus to strike a deal with the Kurdish regional government – which says it has 250,000 bpd of production potential at its disposal – has waned.
As a result, oil companies in Kurdistan are supplying the domestic market with crude at $50 a barrel, less than half of prevailing export prices.
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