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Very encouraging start, I do believe we are near the end game. We know that big investors here do have contacts within Kurdistan and probably Iraq where any information can be sold to the right people.
Normally a reason. Anyone out, not that expensive to get back in.
I think the huge bull flag on the daily about to appear may be it
Some news must have got out surely, deal reached?
I believe people saw DNO numbers at 90k bopd, our December numbers were already 21k bopd by the 11th, put two and two together.
Sly shxts
"Genel moving as well"
Folk giving 5 shares as a gift instead of Quality Street.
Genel moving as well
"I sold yesterday sod law"
You will be ok, it's just traders doing the hokey cokey
I sold yesterday sod law
A mad rush it seems
4.5p jump in 20 minutes
I’d hazard a guess and say we won’t see anything meaningful until after the 5+ bid round terms are known in Jan.
The Iraq government now has legal control over all payments to the KRG IOCs, so have the leverage in negotiations.
OK, so looking into the 5th bid round terms and the ‘profit sharing’ agreements. The IOC takes around 2-5% of the gross revenues in remuneration after tax. Leaving the government with 95-98%.
All in, a company can expect on a sliding scale : 0.73c to $4.55 per bbl profit, against the oil revenue per bbl.
i.e.
0.73c = Oil market price of $21.5 bbl
$2.11 = Oil market price of $ 50 bbl
$4.55 = Oil market price of $100 bbl
Comparison:
The KRG contract provides an IRR of 17.7%
The 5th bid round contract an IRR of 15.1%
This doesn’t sound much, but the effect on NPV is massive.
It would drop the NPV of GKP by around 64%. Basically, GKP would be worth 1/3 of what it was under the KRG contract.
All imo and dyor.
I actually don't think we will see contracts altered in any significant way. Certainly the short-sighted Iraqi Politian's would like it as it further lines their pockets. Got to be remembered the last round of profit shared contracts was deemed a failure by the lack of uptake.
Far more likely is a tweak of the Iraqi constitution rules to enable current Kurdistan contracts to be recognised. They just cannot afford to continue like this as loosing critical income in a major way due to their own stupidity.
They wont want to do it, but they will have to as they now find themselves aligned against the IOC's, Kurdish authorities and Turkey, all of which they need to satisfy and work with.
Great, thanks for the reply theoryman. I’ll look into the potential new profit sharing ones.
As far as I am aware there hasn’t been a new TSC signed in the last five years.
The only type of contract which is illegal under the Iraq Constitution, as of Feb ‘22 onwards, are Production Sharing ones.
News releases from the FGI imply that the 2024 round of bidding for new contracts will be based on an improved version of the 2018 profit sharing model.
If the new contracts are offering that, it seems reasonable to assume that any adapted contracts for those IOCs already operating under PSCs will be offered something similar - mind you this is Iraq where they all seem to have undergone logic bypass operations.
If you want to DYOR into what the old TSCs offered then find the original contract for every one of them and what they offered, then find every agreed change as production targets were met etc.. Probably not worth the effort 🙄 There used to be a government site where every one of them was listed, it was a long list!
Agreed
"The first step is to collaborate with the region and companies to modify their existing contracts to align with Iraq's constitution. Within three days, we could have a deal."
Surely that means, as they have pressed before, TSCs?
Why would Iraq go through all this effort, and offer to back pay the IOC’s etc if they weren’t going to make money?
I just can’t find what the margin on the TSC’s is?
Total Energy is the only company I can find with a PSA but they had a strong negotiation position.
Does anyone know what other IOCs in Iraq receive for their TSC?
What would the estimates profit be for GKP?
DNO have now managed to increase to 90K BOPD. Cant see them giving into financial blackmail to sign new contracts with poor returns either. Their crude is lighter than ours so likely to be more in demand.
https://www.rudaw.net/english/business/19122023
Making some decent profits on local sales, over $10 Million last 3 months , the oil they produce , more sought after,
Pure, unadulterated Empire of Lies propaganda.
https://www.iea.org/data-and-statistics/charts/russian-total-oil-exports-january-2022-january-2023
Other EU countries are still doing business with Russia and buying oil and LPG, it's just GB News stirring up some good old outrage for the hard of thinking again.
Https://www.gbnews.com/news/world/erdogan-oil-deal-putin-russia-eu-sanctions
Pipe will be open in days if this escalates lol
@xxxxA, in each type of contract there are “agreed costs”. The problems arise from which costs can be submitted for approval and the rate at which the costs are returned to the IOC.
In all contracts there is a limit placed on the amount reclaimable per invoicing period.
In addition, in any SHARING contract it is vital to understand at what stage the approved costs enter the sharing calculation.
E.g. in the Shaikan PSC the limit is 40% AFTER the Royalty of 10% is deducted, calculated on a monthly basis.
Next we come to the various contracts that might be offered.
There are at least four types of sharing contracts. Production, Revenue, Hybrid of first two and Profit.
Then there are the TSCs operating in the rest of Iraq. In the sharing contracts the profit element per barrel is a function of the PoO, in a TSC it’s fixed but open to change by mutual agreement.
At the same time the IOCs in Kurdistan were signing the PSCs, there were IOCs in the rest of Iraq who were underbidding each other for contracts - some happily signed up for between $1 and $2 per barrel for the profit generating element.
IMO the most likely outcome will be a profit sharing contract based on an informed upgrade from the 2018 version. Hopefully the FGI will have learned from the outcome of that round and the input from AKIPUR.