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It seems like yesterday that this sat at one pound 80 and I should have sold. But should have and could have do not bring home the bacon
Resumption оf Kurdistan oil flows not оn Iraq's agenda.
2024-03-24 11:52.
Shafaq News/ Reuters quoted three sources as saying that a year after the closure оf the oil pipeline between Iraq and Türkiye, the channel that previously transported around 0.5% оf global oil supplies remains “stuck іn limbo”, hindered by legal and financial obstacles tо resume flows.
Approximately 450,000 barrels оf crude oil flow through the Kurdistan Region оf Iraq's oil export pipeline via Türkiye every day, and its closure led tо losses оf between $11 and $12 billion for Iraq, according tо estimates from the Association оf the Petroleum Industry оf Kurdistan (APIKUR).
One source familiar with the matter told Reuters that resuming operations іs not currently being discussed.
On March 25, 2023, Ankara ceased oil flows through the pipeline following an arbitration ruling that deemed its actions a breach оf the 1973 treaty. The treaty required Baghdad's consent for oil exports from Kurdistan.
Consequently, an Ankara court mandated a $1.5 billion compensation tо Baghdad for unauthorized exports between 2014 and 2018, with an ongoing arbitration covering subsequent years. This legal dispute continues, prolonging tensions between Iraq and Kurdistan region.
Iraq іs obligated tо make minimal payments tо Türkiye as long as the pipeline remains operational, estimated at approximately $25 million monthly. However, despite this potential financial incentive tо resume flows, sources indicate that Iraq's commitment tо OPEC+ oil export cuts currently sidelines any plans tо restart oil flows from the Kurdistan Region.
The geopolitical landscape further complicates matters due tо strained relations between the Iraqi government and Kurdistan Region, tracing back tо the aftermath оf Saddam Hussein's overthrow іn 2003.
Michael Knights, an Iraq expert at the Washington Institute for Near East Policy, highlighted the United States' interest іn mediating a resolution. Lower oil prices resulting from the pipeline's restart would align with U.S. interests, prompting diplomatic efforts tо broker a deal amid the ongoing legal and geopolitical challenges.
KRG Finance Minister recently gave an interview discussing the budget issues, you might be interested:
Source: https://www.kurdistan24.net/ckb/story/254619-
APIKUR made a statement (nothing new really, but interestingly, first time Caggins alluded to sanctions:
"'Iraq is constantly being exempt from sanctions for importing electricity from Iran, when it should have strengthened its energy infrastructure through more oil exports,' he said."
Source: https://www.kurdistan24.net/ckb/story/254620
Have a great Sunday
Source: https://twitter.com/KurdistanWatch/status/1771194036583321941
Nouri al-Maliki, leader of ‘State of Law' coalition, in an interview, stated:
"During a phone call with Masoud Barzani, he assured me that the KDP will not withdraw from the Kurdistan elections. However, they are awaiting the interpretation of the Federal Court's decision."
See also: https://twitter.com/KurdistanWatch/status/1771494350951788699
"According to several media reports, as well as a statement from Masoud Barzani himself during his meeting with the U.S. ambassador, the KDP has likely rescinded its decision to boycott the upcoming Kurdistan elections.
There are two primary reasons for the KDP's reversal:
1. The KDP has concluded that their unilateral boycott would further exacerbate the situation and negatively impact the legitimacy of the constitutional structure of the Kurdistan Region, as conveyed by foreign diplomats, including the U.S. ambassador.
2. The KDP found itself isolated, as all other major Kurdish parties have committed to participating in the elections as scheduled, including the PUK, Social Democratic Party, Gorran Movement, Communist Party, New Generation, Justice Group, Islamic Union, People's Front (Lahur Sheikh Jangi), and the National Stance Front (Ali Hama Saleh)."
My thoughts: KDP not happy with reduced economic autonomy and thus political economy; throws its toys out the pram (appeal to US; publicly rejects Iraq Supreme Court rulings; declares rather publicly its boycott of the elections...) then backtracks on these after visits from US officials/recognizing they will not get the support necessary to follow through.
Does this mean KDP/KRG accepting the new reality of a smaller piece of the economic-political pie that is northern Iraq?
Maybe over the past few weeks and months, Barzarni/KDP et al have concluded that a smaller piece of the pie is better than no pie...
In this context, repairing and restarting the Kirkuk-Mosul-Turkey is (from ICG POV) a wise play, with two logical conclusions:
1. Securing its own oil route to northern export markets (still via Turkey) removing all reliance on pipelines transiting KRG-controled territories (using this as leverage to negotiate terms of restarting the Kurdish pipeline - and both ultimately operating together).
2. Securing its own oil route to northern export markets (still via Turkey) removing all reliance on pipelines transiting KRG-controled territories (and leaving the Kurdish pipeline to rot, as a sardonic symbol of failed Kurdish secession attempts).
My opinion: Option 1 is most likely.
It makes sense for ICG to completely remove any reliance on pipelines controlled (to whatever degree) by KRG. Increases leverage; diminishes KRG economic autonomy. In this context, recent/repetitive statements ("we're studying proposals etc") is likely playing for time until Kirkuk pipeline operational, and Kurdish pipeline becomes a moot point.
Turkey must already b
Found on:
https://twitter.com/KurdistanWatch/status/1771215680588706084
Source: "Kurdistan Watch" (not sure what the political bias of this outfit is, any ideas?)
Text:
"Iraq Revives Kirkuk-Mosul-Turkey Pipeline to Replace KRG's Oil Export Route
The Iraqi Oil Ministry is reportedly currently working on restoring the Kirkuk-Mosul-Turkey oil pipeline, with expectations of completing the project within the next two months -- intended to replace the KRG pipeline -- and has the capacity to transport over one million barrels of oil per day.
The pipeline system consists of two separate lines: a 40-inch line and a 46-inch line, both possessing the combined capacity to transport 1.6 million barrels of oil per day.
The pipeline route will originate from the Kirkuk oil field (K1) and Talward, proceeding to the Riyadh district of Hawija, then to Beji, and subsequently to Fatja, Mosul, and finally reaching the MS station in western Zakho. Employees of the Northern Oil Company who are present there will monitor and measure the oil shipments twice daily.
Iraq will be obligated to pay a fee to Turkey for each barrel of oil exported per an agreement amended in 2003, stipulating a fee of 70 cents per barrel if the export volume surpassed 400,000 barrels, and 112 cents per barrel if the export volume fell below 200,000 barrels."
belgrano that's it in a nutshell!! kurdistan and turkey should just sit it out for 18 months and **** off iraq once and for all.
There are no excuses that Iraq can make that actually carry any resemblance of truth. Such as the one posted in Bloomberg yesterday that Iraq has yet to amend laws to allow payments. Its clear lies.
https://www.bloomberg.com/news/articles/2024-03-22/iraq-is-yet-to-amend-budget-to-get-kurdish-oil-flowing-again?embedded-checkout=true
Had much more than ample time to do it, years in fact but choose not to due to deliberately trying to force hardship on Kurdistan due to cultural differences.
No one believes what they say, because they talk plenty and then do the opposite, as the many embezzlers in charge have allegiances to Iran, not the people of Iraq. Most know hardly anything about the oil business, having been given positions and over rewarded salaries via family connections and not hard graft. That became crystal recently when it was revealed that they didn't even know much about our own contracts despite shouting that they were illegal for years.
"If they have balls and confidence, they'd do a lot more... Weatherdon didn't have any and that's why he was pushed out."
No need for 'balls and confidence', just common sense and the fullfilment of their duty to act in the best interest of shareholders given that they have been authorised and 'encouraged?' by the shareholders themselves to do so!
AGM after AGM there were resolutions passed almost unanimously to authorise the BOD to buyback c. 10% of GKP's common shares AND an additional resolution "THAT the Company be generally and unconditionally authorised to make market purchases of its Common Shares."
Such resolutions were left unexecuted year after year!
Best Regards ValueS
Itsaaaaaaponzi I wouldn't mind a pound for very time I have heard that over the last year !!
We all know it's not opening now . Kurdistan and Turkey will sit it out till the pipeline contract runs out with Iraq. I would and if the boot was on the other foot so would iraq.
Gkp will just limp along making 7/8 million a month FCF now .
Good riddance to Iraq once and for all unless they agree on some super terms for the IOCs which they won't because ots not in their nature. 18 months will fly by.
Independents baby .......
"But, the argument of "if you cant't do it there are others who can" is a powerful one. "
So is the argument that "we'd do it if you maintain our current contract." But this is in essence the battle before the company. Existential. Can we get to a sensible contract that allows for sensible development of the field? If not it's tits up all round. That was where we were before this whole thing blew up - the self funding plan. A notion that many didn't get. I still think the current contract and previously agreed FDP will - largely - prevail but that's based on hope for commonsense and not any blind faith that "the oil will flow" or "Shaikan heavy will be in demand". Of course both will - whether it's with or without GKP is the question.
"The huge dividends paid out so far can be seen as a red rag to a bull"
I think it readily arguable that the company isn't paying out profits but rather the capital it invested and has had returned via cost recovery. For that Iraq has a producing field and all the assets needed to run it. (It would be interesting to add up all the capital deployed by this company since inception and compare it with that returned via dividends and buybacks. How much of that returned was capital versus generated free cash flow (true profit)?)
If you are confident in your belief that commonsense - and GKP - will prevail then having the company buy back and cancel 10-15% of its current shares o/s at anywhere near current prices ought to make a lot of sense to you. At an absolute minimum they should buy 8 million shares for the EBT to cover the full o/s stock options rather than issuing new shares. If they have balls and confidence, they'd do a lot more... Weatherdon didn't have any and that's why he was pushed out.
"March 22 (Reuters) - The United States has urged Ukraine to halt strikes on Russian energy infrastructure, warning that drone strikes risk provoking retaliation and driving up global oil prices, the Financial Times reported on Friday, citing people familiar with the matter.
The attacks helped boost oil prices that have risen nearly 4% so far since March 12, when Ukraine first started targeting Russia's energy infrastructure. A further rally in gasoline prices in the United States would weaken President Joe Biden ratings and undermine his re-election chances."
h**ps://www.reuters.com/world/europe/us-has-urged-ukraine-halt-strikes-russian-energy-infrastructure-ft-reports-2024-03-22/
Putup,
I wouldn't disagree with any of that....BUT, at the end of the day, the sovereign entity determines the oilfield development plan (in agreement and after deep consultation with the contractors).
In the event that agreement is not forthcoming then a parting of the ways (in extereme case) could be on the cards - in GKP's case I consider that unlikely as the company has been both successful and cooperative (so far) in it's government dealings (as far as we are aware). But, the argument of "if you cant't do it there are others who can" is a powerful one.
The huge dividends paid out so far can be seen as a red rag to a bull - should you be that way inclined, as some in Baghdad and Erbil are.
I would argue for a nominal 3.5p per share max.
Thanks BB, your negativity in GKP’s prospects has given me more confidence in my investment. Shaikan heavy will be in demand long after light sweet crude has had it’s day.
"if the self-funding model still has legs.
And I believe it does.
"
How can you? The 'self-funding model' requires a contract with sufficient cost recovery headroom to 'fit' an agreed Field Development Plan. The company isn't close to concluding either. The arguments between Erbil and the MNR about the cost of extraction are just the start of what needs to be resolved. The company needs to no longer use waste sums of its own capital to fund the field development on behalf of Iraq. That's what sent them bankrupt. Instead they need to maintain a minimal capital base, returning any excess to shareholders, and not agree to a FDP that can't fit within the contract cost recovery envelope. I'm not saying maintain zero cash, but $86 million is far too much. Nearly 30% of the current market cap is earning next to nothing. They can cut that in half without materially affecting their risk of survival.
Good point well made BB.
Hanging over the company is the prospect of a new/revised FDP - which is now no longer the sole remit of the MNR in Erbil. SOMO and NOC now call the shots re how the Iraq oil industry should be developed and that will be felt also in the KRI fields. It's also not a given that all of GKP's output will be accepted into the Kurdish blend - again, SOMO will decide upon the export blend parameters and a fair proportion of the heavier SH crude may be permanently directed towards local customers who will pay much less than the international value.
Until that new FDP has been presented / agreed / forced upon GKP, and others, the company would be well advised to hoard cash or keep ANY dividend to an absolute minimum.
The cessation of flaring for example will be expensive, whatever form is decided upon. In a similar vein, forced (as in their timescale, not GKP's) exploration of the deeper formations will also eat cash.
Aah yes.
And the hits just keep on coming!
Truth is though, GKP can afford it and much more if the self-funding model still has legs.
And I believe it does.
If I'm wrong then I'm going to lose a lot of money...oh well. I can afford it.
Have a good weekend.
Disagree
In any event, don't cry when they issue more stock to cover the vesting of the next block of the 8.224 million options o/s.
That equates to deranged management of what is a fragile asset under threat.
GKP needs to preserve its equity right now, not give it away on a whim.
There's plenty of time for the Board to recognise shareholder support when they're through this trauma.
But not now.
Surely.
No need for $86 million to sit on the balance sheet earning f all. As far as I am concerned that excess cash is losing circa 15% per annum. Return it so we can put it to work for positive return.
The whole self-funding proposition depends on the pipeline re-opening...it's a given.
Otherwise GKP is just another traded stock with no intrinsic value.
What makes me laugh is that some investors don't get that.
Some of them even describe a scenario where with limited financial resources GKP would even consider dividends and/or buybacks as a serious option...idiots.
"GKP are debt free" almost, now finally with "the payment of all remaining overdue invoices in 2024." So now that they are finally current on their payables they have debt of about $13 million. They've managed this well.
"self funding" depends on what contract they end up with. Unfortunately little progress has been made on that. Let's see how that unfolds. As has always been the case, upside depends on the receipt of overdue receivables, contract ratification and pipeline reopening. The current stock price is still pricing in resolution of much of these within the next six months. Cheap for good reason.
The sell off continues 90s Monday anyone ?? God I'm good at predicting this share price .
Always 3 down days after a RNS.
“We seek to accelerate the settlement of the cost issue and resume exports as soon as possible,”