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Sorry if I’ve missed something very fundamental here, if anyone can point out the likely deal I would be grateful
There are so many bloomin articles on this I’m completely confused.
First we were asking for market price to be paid
Then government said they wanted profit share
Now Baghdad is taking of paying only $8 a barrel. Why would we sign up to that?
So if oil price rose to $80 a barrel from 70s now we wouldn’t gain anything?
Mr Put-up
I support your view that it will be at least 3 months before the pipe is likely to open if that.
Turkey is quite broke and owes the other side a huge debt that they are unlikely to pay except in small amounts.
All they have to offer us water! - wait until the Spring.
All, looking for some advice.
Whilst I have discounted receiving any dividend until 2025, which I hope is conservative, I would appreciate a sanity check on my estimate of dividend potential. Based on the existing PSC's, USD 80 Brent and 50kbpd - I get a dividend payment capacity of just under USD 1 p.a..
Does this seem reasonable? Not looking to be spoon fed, but just want a sanity check. All helpful comments appreciated.
Think we have to digest the article carefully and include the normal pinch of salt, because it talks about the way forward but also as Putup kindly points out some history as well.
However for me looking at the way forward there are most certainly positives. We have the prime minister saying the current law could be tweaked to enable full payment under contractual terms, which would make everything legal and above board.
No mention about payments being excessive now they have finally understood the differences in the risk/reward game of contracts in virgin ground and known oilfields.
Yes some older material on how they would like the Kurdish IOC's to fall in line with current Iraqi policy and terms, but only a fool would do that ad extract crude for peanuts , and they know the IOC's act and operate as per existing contractual terms and will not budge.
It also points out that Iraq has to move as they are loosing millions every single day already by my own slide rule approaching 10B$ and counting. While the IOCs are easily keeping their heads above water by supplying local market and export trucking operations. Let aloe the extra 1M a day fee for unused pipeline penalties.
Iraq has only itself to blame for this mess as it started court proceedings and is now paying in lost revenue several times the amount of the award, and they didn't have the foresight to tweak existing laws in advance so as the Kurdish oilers could be legally rewarded under contractual terms.
Indeed if we believe some articles they didn't really even know what the Kurdish contracts paid the IOC's, despite supposed to be in charge of all Iraqi crude. So spouted "illegal contracts" for years, but when they eventually found out what the IOC's actually get it is pretty decent, and Kurdistan/Iraq does get a fair share.
"They reap what they sow", and Baghdad sowed poisonous weeds.
"Last month, hopes about a deal were renewed when Iraq’s oil minister Hayan Abdel-Ghani visited Erbil to discuss the matter with the Kurdistan Regional Government. "First step is to agree with the region and companies on adjusting their existing contracts to be consistent with Iraq's constitution. We could reach a deal in three days," Abdel-Ghani said at the time."
You guys have trouble reading? Note the article says "last month" and "said at the time."
3 days possible to restart oil pipe line!
Last time it was turkey stating restart within days.
Now also Iraq! Good day tomorrow! Shoukd be 120/130s anyway IMO
"3 days ? That definitely won't happen should read 3 months at least. "
Read again
"Abdel-Ghani said at the time."
Never said it was tw*t. Where in the below do I talk about the company's financial statements?
Blocked for achieving 'legendary idiot status'.
"Any move to a fixed amount per barrel is a mistake for Iraq. There's a material difference between capex, opex and a return for doing the work (aka until known as Profit Oil). The latter falls well within $8 per barrel. Opex has been $3-3.40 per barrel. Capex much higher still reflecting the development nature of the field. GKP makes no margin on the last two. They're merely the instrument of the KRG, consulting on and implementing an agreed plan (the FDP) on their behalf. The only risk they take with respect to field development is that in relation to being reimbursed for capex and opex and the extent to which it affects their Profit Oil stream.
Iraq would be foolish to move too far away from the present scheme. Under it they reap the lion's share of any value created (albeit they shoulder the lion's share of field development risk). GKP would be foolish to shoulder more of the risk of field development also.
The debate ought to centre around the (gross) 'profit' going to the IOCs for implementing the field development and operating the field - the Profit Oil component. As of our last regular receipt (September '22 production) this was $4.14 per barrel net to GKP or, more relevantly re the proposed $8, $6.73 per barrel to the Contractor (gross of the GKP CBC). Under the present PSC this is a variable number. It shifts higher as production shifts from Cost Oil to Profit Oil and shifts lower as more production is realised and the R Factor rises. But in general the margin is small (and from this margin the IOCs must cover their non-recoverable G&A expenses and GKP pays a CBC also).
If the IOCs are to really bear the risks around capex and opex (which a move to a fixed amount per barrel produced would do) then their required return would have to be much higher. Operating costs were circa $3-3.4 per barrel (one could figure out a more accurate figure within this range) and capex per barrel an amount on top of that. The IOCs would have to earn a margin on these costs, particularly capex given it is investment now for a future return. They'd also need much more freedom (since they bear risks) around the FDP."
First step is to agree with the region and companies on adjusting their existing contracts to be consistent with Iraq's constitution. We could reach a deal in three days," Abdel-Ghani said at the time.
3 days ? That definitely won't happen should read 3 months at least.
Fee up with hearing the same bull.
We heard all this rubbish talk 7 months ago and nothing never happens.
Several local media claim that Kirkuk governor, Rakan al-Jibouri, sent a directive letter asking the Iraqi forces to take over some assets belonging to Kurds, arguing they don't have license, and he planned to go there with the army to film himself as election material to rally his Arab base just days before the election but the Iraqi army refused to comply.
There we go....it finally admits that there's no Profit Oil on the Financial Statement.....
p.s. I'm C Suite IOC
pps, cannon fodder, lol. So 19th C.
toodles....
Good luck Andy1022, but if you can't even understand how the proceeds of oil sales are divided between the KRG/Iraq and the IOCs you are merely cannon fodder for those that do. Hint: sales proceeds, after a 10% royalty, are split between what is labelled in the Production Sharing Contract as Cost Recovery and Profit Oil. The formula determines the payment the IOC receives. The payments GKP receives, gross of the Capacity Building Charge (which is deducted under Cost of Sales as Capacity Building Payments - see note 5 to the accounts), is booked as "Revenue" in GKP's financial accounts - the first line in the consolidated income statement (see also note 4 to the accounts). If you don't understand the Cost Recovery and Profit Oil formula in the PSC you haven't a hope of figuring out the very FIRST line item in the company's financial accounts.
Now run along and do some homework.
Oh my dearest SHUTUP.....
Let's boil things down to the simplest common denominator ....
but 1st , some helpful advice...
stand up , move away from the computer , clean up your mess, sit down again and ....
post any formal annual financial account statement from GKP that has a line item called "Profit Oil"
there's a good chap.
OMG you don't even understand the terms by which the company gets paid. Doof! This has nothing to do with accounting. It's about who gets what when a barrel of oil is sold. And that's the debate the KRG and central Iraqi government are having - how much per barrel should the IOC get. Currently that's defined in each Production Sharing Agreement. Go do some study on the economic fundamentals behind this company (and the other IOCs in Kurdistan). Accounting comes much later.
SHUTUP gets it wrong again.
You think the Companies Act 2006 regards PowerPoint as financial statements?
CA 2006 recognises two financial reporting frameworks – IFRS and UK GAAP. In this context IFRS means international standards and interpretations that have been endorsed by the EU (EU-adopted IFRSs)
PowerPoint isn't one of those .
Dolt.
Andy1022 needs to do his homework and understand what the current PSC is. Muppet.
Here. I did your homework for you. Slide 26. Ignore it at your peril.
https://wp-gulfkeystone-2020.s3.eu-west-2.amazonaws.com/media/2020/02/gkp-corporate-presentation-22-jan-2020-vfinal..pdf
SHUTUP making stuff up again.
Where on the Financial Statement of any O&G Co. is 'Profit Oil"
Don't believe this , search the term, it doesn't exist .
Idiot.
First, no surprise on the 8th member (GKP's partner).
Any move to a fixed amount per barrel is a mistake for Iraq. There's a material difference between capex, opex and a return for doing the work (aka until known as Profit Oil). The latter falls well within $8 per barrel. Opex has been $3-3.40 per barrel. Capex much higher still reflecting the development nature of the field. GKP makes no margin on the last two. They're merely the instrument of the KRG, consulting on and implementing an agreed plan (the FDP) on their behalf. The only risk they take with respect to field development is that in relation to being reimbursed for capex and opex and the extent to which it affects their Profit Oil stream.
Iraq would be foolish to move too far away from the present scheme. Under it they reap the lion's share of any value created (albeit they shoulder the lion's share of field development risk). GKP would be foolish to shoulder more of the risk of field development also.
The debate ought to centre around the (gross) 'profit' going to the IOCs for implementing the field development and operating the field - the Profit Oil component. As of our last regular receipt (September '22 production) this was $4.14 per barrel net to GKP or, more relevantly re the proposed $8, $6.73 per barrel to the Contractor (gross of the GKP CBC). Under the present PSC this is a variable number. It shifts higher as production shifts from Cost Oil to Profit Oil and shifts lower as more production is realised and the R Factor rises. But in general the margin is small (and from this margin the IOCs must cover their non-recoverable G&A expenses and GKP pays a CBC also).
If the IOCs are to really bear the risks around capex and opex (which a move to a fixed amount per barrel produced would do) then their required return would have to be much higher. Operating costs were circa $3-3.4 per barrel (one could figure out a more accurate figure within this range) and capex per barrel an amount on top of that. The IOCs would have to earn a margin on these costs, particularly capex given it is investment now for a future return. They'd also need much more freedom (since they bear risks) around the FDP.
Nice to see that the Baghdad oil ministers after drawing an extortionate salary for many years have finally learnt how much the IOC's operating in Kurdish territories which is part of Iraq are actually being paid for every barrel of crude they produce..
Are they really for real......... You could not make up this level of incompetence, it just cannot be true.... can it??
It states that the agreement comes out at $21 dollars a barrel, for doing everything from roads, infrastructure, all exploring in a virgin plot, where as in Iraq, you had known quantities , easy to extract oil, with a lot a basic infrastructure like pads and roads already constructed.. there they get rewarded $8 per barrel.
Well actually considering all the risk/reward factors I believe those figures are pretty fair, if not even a bit one sided towards the Baghdad fields, where some local export pipelines exist.
Only a fool would disagree.
Bit of a re-hash, but Sudani is blaming the oil bill of course.
Rudaw Digital
Since the suspension in March this year, negotiations to re-export oil from the Kurdistan Region through the Turkish World Port continue. The latest response from the relevant parties in Turkey, Iraq and the Kurdistan Region is that they are ready, but there are technical problems.
"Everyone is ready, really," Iraqi Prime Minister Mohammed Shia Sudani told Rudaw. The problem is that the House of Representatives has introduced an article that says the cost of producing a barrel of oil will be based on the national average. This is set in the House of Representatives, the Finance Committee, not the government. "After Turkey announced that it was ready to resume oil exports, we came and talked to the oil companies. because the average cost was set at eight dollars."
Oil production companies gathered within the framework of the Kurdistan Oil Industry Association – Epicur. Miles Cagins, spokesman for the association, told Rudaw that they would not resume production until the cost of oil extraction was equal to that paid to Iraqi companies.
“In light of the bill in the House of Representatives, we have to pay $8 per barrel to produce, while the cost of producing a barrel of oil in their contracts with the Kurdistan Regional Government is $21. Neither the KRG nor we can break the law. This is one of the problems with the budget bill voted by the House of Representatives. Companies are now waiting for this article to be amended."
Bestun Osman asked Sudan about the cost, you as the Council of Ministers will agree to the amendment and send it to parliament?
Sudani replied, "Certainly, because we are now losing about 470,000 barrels per day, this is the amount that should have been exported from the Kurdistan Region and also from outside the region. So some time ago, if you remember, we sent the oil minister and the deputy prime minister to the Kurdistan Region and they had a meeting with the minister of natural resources and a group of oil companies That we have to discuss with the parliamentary finance committee."
According to the Iraqi prime minister, the Kurdistan Region's oil exports before the suspension due to the decision of the Paris arbitration court was 380,000 to 400,000 barrels.
The Iraqi prime minister said that they are now supplying 80,000 to 90,000 barrels of oil to the Kurdistan Region
looking good for face saving and resumption Imo.
https://www.rudaw.net/sorani/business/151220233
From ADVFN unverified.
Danish shipping company Maersk has said it is pausing all journeys through the Red Sea. The decision comes after a spate of attacks on vessels launched from a part of Yemen controlled by the Houthis - an Iran-backed rebel movement.
The group has declared its support for Hamas and say it is targeting ships travelling to Israel. The Red Sea is one the world's most important routes for oil and fuel shipments.
"The recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers," Maersk, one of the world's biggest shipping companies'
C.21,900 bopd between 1-11 December