Oil exports from the autonomous Iraqi Kurdistan region have failed to materialise, despite the central government of Iraq and the Kurdistan Regional Government (KRG) reaching an agreement to start exporting the region’s crude into the central government-controlled export infrastructure by 1 February, according to senior Middle East energy analyst at IHS Global Insight, Samuel Ciszuk.
However, an unnamed KRG oil official quoted by Dow Jones stressed that the delay was due to technical testing of the tie-in pipeline for Iraq’s northern Kirkuk-Ceyhan export pipeline to the Turkish Mediterranean coast and that exports would be onstream in the “next few days”. “There are no problems, [no] political problems”, he hastened to add. Iraqi Kurdistan exports are expected to come onstream at a rate of about 100,000 b/d at roughly equal shares from the Tawke field, operated by Norway’s DNO; and the Taq Taq field, operated by a consortium of China’s Sinopec and Turkey’s Genel Enerji. As companies undertake further development, exports are likely to reach between 200,000 b/d from the fields by the end of the year.
Significance:
“Few details have yet been clarified about how the oil companies producing oil under the production-sharing agreements signed with the KRG will be paid by the Iraqi Oil Ministry, with the national Oil Ministry still adamant that it will only reimburse costs—including capital costs incurred previously—for the companies, as it still does not recognise the contracts themselves, given that Iraq has chosen to base its development of technical service contracts, and also has been unwilling to recognise the KRG’s right to award oil contracts at all,” says Ciszuk.
Hence the area from which the oil companies will get any profit share still needs to be clarified and will obviously be a key question for them to see solved in order to undertake any further developments.
This is even more so for the increasing number of IOCs that have started exploration programmes and in the relatively near future will look to either commit to further exploration spending or development of eventual discoveries, based on the rates of return they can expect.
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