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Cannot find anything other than a generalised analysis and summary of all of the outcomes of the bids in that 2018 auction.
References cost recovery percentage limit of 20% if PoO very low but 70% if it’s anywhere near where it is now. Why are they questioning the 40% max under the current PSC?
References MoO thinking that IOCs bump up the costs! So are they offering 70% of costs BUT only after they have removed the froth and rendered them “realistic”.
References low cost fields versus high cost ones in Iraq, $5 per barrel versus $20. Gives an idea into how they come up the bizarre $6 average included in the Budget Law, which is now being referred to in Dinars in some quotes.
The model used in 2018 was for use in a bidding contest. The FGI set a max for the profit generating bit and companies had to decide where to pitch their figure without knowing if the field would be commercial etc..
How will that transfer to a contract that already exists for a field which is producing?
Had to laugh at one outcome. Max allowed by FGI was 14% for one field and the winning bid from a sole interested party was 13.99%.
Spot on space Tomato,
Now we are almost starting to see the first signs of desperation for our crude, now its clearly a $8Billion avoidable loss to Iraq and counting more every hr.
Also reports that the IOC's will be in meetings to discuss matters in the next few days. They are owed a huge amount of money which gives them lots of firepower to hammer home strong terms.
Even if it was something like this.....all contracts adopted and recognised by Baghdad. and prompt future crude payments agreed if the owed back payments are forfeited? ...big pill to swallow there, but its happened before with our company with a KRG deal..
How would we react to that one.... no "contracts are illegal", all above board...Believe share price reaction would be highly positive indeed.
Dear Belgrano,
I appreciate your thoughtful contribution to the discourse. Your insights resonate with my own sentiments regarding the intricate dynamics between the Iraqi and Kurdish governments.
The prolonged period of anticipation, coupled with what appears to be strategic maneuvering by the Iraqi government vis-à-vis Erbil, indeed elicits frustration. It seems that the IoC may be caught in the crossfire of prevailing regional political machinations, with Baghdad aiming to assert its dominance.
In contemplating these geopolitical chess moves, it is intriguing to consider Turkey's substantial influence as a noteworthy factor. The impending visit of Erdogan to Iraq in December introduces an element of anticipation, suggesting the potential for significant developments and resolutions.
May fortune favor you in navigating these complexities, and may a prompt and equitable resolution be realized for all stakeholders.
Best regards,
ST
@JAB, the contract referred to is a revenue sharing one, so the contractor’s profit comes from their share of revenue as a stakeholder minus costs. The FGI are not involved in auditing the costs wrt value for money, which is why they like them. The structure encourages the IOC to minimise costs through efficient behaviour.
The FGI is a 30% stakeholder, the other two got 70%.
So the FGI got 25% Royalty + (30% of the remaining 75% after Royalty)+ any tax on IOC revenue stream.
What is being floated with the adaptation of the PSCs is a Profit Sharing Contract, which is different concept altogether, because AGREED costs play a vital role.
I agree belgrano. Stay strong and united APIKUR, I'm happy to endure local sales for another year or more if needed. Let's see who blinks first. Baghdad would rather all of Iraq suffered, rather than give KRG and their IOC's an advantage. Turkey, stay strong and don't release any water until agreement is reached.
So maybe room for manoeuvre, but it's whether they will do that for a Kurd based company.
From ADVFN:
In July TOTAL signed a $27 billion deal with the ICG after sticking to their guns and forcing the ICG to back down:-
OILPRICE.com 20th July 23.
"Ultimately, Iraq had to go back to the drawing board several times to reach into its own pockets and dish out even more favorable terms. Iraq eventually settled on hanging onto just 30% of the project, with TotalEnergies grabbing 45% (and QatarEnergy getting a 25% stake).
The revenue-sharing scheme will see 25% of the revenue from each barrel going to Iraq as a royalty, and 75% back to stakeholders.
Chinese, Indians, Russians, French to some extent, all investing in Iraq, where there was a oil and profit there will always be companies looking to invest, it's more a question of how much, and Iraq noods a lot of investment!!!
What an embarrassment this is for all Iraqis.
Public servants like teachers going without wages for months on end....
Almost 9 months in and these clowns are still bickering, unable to reach an agreement over the pipeline.
As belgrano says Iraq is doomed, which businessman or company would want to invest there now after all this? Highly incompetent. Corrupt. Scandal.
Iraq seeks to bring in line Kurdish contracts to ones similar to Iraqi ones....If companies like GKP had hit only dusters or wells with oil that wouldn't yield crude would Iraq compensate shareholders for their losses......clearly no..
However southern contracts with huge known oilfields posed no risk ..so smaller rewards.
I support going to arbitration over this, because I believe they will yield before this happens as they want the water from Turkey and Turkey wants Kurdish crude. If they don't the west will withdraw future help, and they will be forever branded as corrupt.
Https://nasdaq.com/articles/iraq-to-discuss-kurdistan-oil-contract-modification-in-december How do we feel about this? 🤔
Hi Space tomato,
Nope very long and strong here mate. Although my last post outlined serious issues at least I cannot be accused of ramping.
It does good to post facts on how their behaviour is seen in the west. It does get back to them.
Many on here might scoff at this fact and I never believed it myself until something I once posted on LSE became a heated discussion point between a CEO and their Arab clients.
Every post that appears on LSE between UK companies and where they have business in Arab counties is read and examined by individuals paid by certain Arab countries and reports made of those comments and fed back to the Arab paymasters.
Sounds a bit James Bond but I swear its true and the following is factual and happened to me.
A company called OPTIbiotics marketed a slimming product in the far East. I posted on that company's share chat on LSE an off the cuff throwaway comment, about hoping that Mohammed liked his many wives fat. No insult was intended by me, but I should have used nicer words, which was my error. However it did get fed back to those selling the product and led to a 30 min conversation from the company CEO and his Arab customer who were claiming racial abuse. Think common sense prevailed in the end, but it was not seen like that initially and I was pretty stunned to see that just a throwaway comment on here could be blown up into a pretty big thing, and that all these posts are being combed through.
So now you see why I often post things about how Iraq is seen in the west when they want to try and alter contracts after the company and its shareholders have risked significant capital, explored and found oil, and many original holders here still have huge losses.... so important to keep contracts as is even if they do give considerable advantage over some in Iraq, where they sign up to extract easy oil in a known oilfield.
Cannot find anything other than a generalised analysis and summary of all of the outcomes of the bids in that 2018 auction.
References cost recovery percentage limit of 20% if PoO very low but 70% if it’s anywhere near where it is now. Why are they questioning the 40% max under the current PSC?
References MoO thinking that IOCs bump up the costs! So are they offering 70% of costs BUT only after they have removed the froth and rendered them “realistic”.
References low cost fields versus high cost ones in Iraq, $5 per barrel versus $20. Gives an idea into how they come up the bizarre $6 average included in the Budget Law, which is now being referred to in Dinars in some quotes.
The model used in 2018 was for use in a bidding contest. The FGI set a max for the profit generating bit and companies had to decide where to pitch their figure without knowing if the field would be commercial etc..
How will that transfer to a contract that already exists for a field which is producing?
Had to laugh at one outcome. Max allowed by FGI was 14% for one field and the winning bid from a sole interested party was 13.99%.
Iraq reportedly looking to agree something similar to their agreement with crescent oil. Anybody know how this agreement looks?
I can see the contract now "Clause 37b, overall trousering costs", be a thing of beauty 🥰 I'm anticipating some sparring still, but getting to sit at the same table is a big move.
Just our contracts to agree (via Baghdad one hopes), and a mechanism built-in to allow trousering - and we’ll be off and running…….
After so many false dawns I hesitate to say so but have we at long last passed the end of the beginning and entered the beginning of the end. It certainly SEEMS that the only remaining obstacle is an agreement with the IOC’s. That being so better long than short GKP.
Nevertheless Some Patience is still required
Seems to be "Chang to our contracts or else", yet again, see who has the biggest gahoolies.
At last they are going to talk to the IOC's. First round maybe but about time.
https://www.nasdaq.com/articles/iraq-to-discuss-kurdistan-oil-contract-modification-in-december
Same old.....
https://www.kurdistan24.net/en/story/33274-Turkey-ready-to-resume-halted-Kurdistan-Region-oil-export,-envoy-tells-PM-Barzani
The IOC consortium.
JH will realise this and negotiate accordingly.
Another way of saying the consortium will bend and compromise...
The next OpUp is scheduled for w/c 18/12/23...probably 21/12.
Until then we all have to endure the speculation of the speculators.
Dull and as un-informative as ditchwater in the end.
The oil will flow. And the export taps will get turned back on, probably in Q1 2024 (as previously predicted months ago).
And for the initiated well we too easily understand the underlying financial structure of GKP's self-funding proposition.
And its innate commercial strength even in the face of adversity.
So whatever the settlement detail arrived at between the competing geopolitical parties, the critical factor is the strength of GKP's fundamental trading platform position. GKP have a fundamentally different P&L trading and borrowing proposition to their co-members in
Geez, Belgrano, you sound like you are sold out? I don't think the share is going down much from here. I for one ain't selling a single share. This pipeline will open eventually you know.
Its all smoke and mirrors from Baghdad, deliberate delays without any intension of ratifying the Kurdish contracts unless they have to. All the while smiling and being as two faced as we know the Iraqis can be.
Little wonder why few companies in the west want to do business with them, corrupt as hell and only themselves to blame.
Turkey is loosing money with no crude oil flowing, and its already found out from Iraq that the true consequences of leaving the dam water flowing for a month " as an act of goodwill "gets you in Iraq....nothing.
Suspect the IOC's know the same for crude exports...thats why its not happening.. they would just take the crude for nothing , or paltry change and trouser the real profits like the corrupt politicians they are.
So the water flows have reduced and its now being used as a pressure lever on Baghdad.
I'm not fully aware of the situation here, but AIPKUR have indicated they are willing to look at changes to the contracts in saying any amendments must be agreed with them beforehand, but it's politics. Sudani wants central control back on his terms, he has Iranian influence to contend with, anti Kurd rhetoric to boost his political position, and a lot of pockets to line. Against this is economic, political (via US / others which is building) pressure, protests growing, 7,000 families displaced because of the Turks turning off the water, infrastructure challenges because of the water shortage, (you could argue about the 7 billion lost as they are pumping oil via other routes?? What's the opinion here?) Oh and as with most other politicians, a huge ego mixed with limited emotional processing ability that restricts long term planning in favour of short term opportunities. Oil will find a way to the market, which way will it be!!?!