Blencowe Resources: Aspiring to become one of the largest graphite producers in the world. Watch the video here.
Clearly with the annual anniversary of the pipeline flow stoppage already passed, DNO are reporting very buoyant sales trades and confirming that demand is exceeding current supply. Also points out that margins are now being reflected on worldwide crude prices and good margins are being made by producers and haulers, Also points out that its crude is reaching all areas of the world now.
Quite simply its large export volumes that are causing this crude shortfall and prices are rising.
Must also be the same for GKP, they cant get enough of our "sludge", also clearly its not being all used in local markets either but going international.
As demand and margins rise, expect we will see some infrastructure works soon. Also very good for shareholders.
The incompetence of the Iraqi oil and gas ministry despite being massively overmanned is simply mind boggling. The previous round 5 gas contracts were sold as being "fast tracked", although it has already taken them 5 years to even get to a contract award stage, however in this meantime they have been dependant on Iran. Or has it been deliberate??
https://www.mees.com/2023/2/24/oil-gas/iraq-eyes-gas-boost-with-signing-of-fifth-licensing-round-contracts/db9621f0-b438-11ed-8230-e9f78a69afa6
Little wonder many companies have quit completely, seems they require financial "enhancements", all the time and still don't proceed. Just like the problems we are currently having.
Got a feeling there are not going to be many takers this time, they think the world owes them a living and they are just too greedy.
I think the following statement says it all …. In a significant announcement, Prime Minister Al-Sudani extended the application deadline for the fifth and sixth licensing rounds by two weeks,
Not surprised at all that they wish to extend the time period. They want as many companies as possible to participate.
Why....Well corruption in Iraq starts the moment you express an interest in helping them.
Participation fees for rounds 5 and 6 are $100,000 each.... Lots of extra payments if successful as well. Nice little earner for nothing, just accepting them at your meetings.
Hi Rog,
We know that prices paid at the pumps in Iraq have increased by a third almost overnight and crude prices paid for DNO are now high 30's.
We were also informed that there is a bit of a shortage of heavy crude availability currently, which is a little surprising.
Hearing that DNO in discussions about exporting also good news as it tends to indicate all the IOC's are also involved.
For my part I don't need a current upgrade on local sales prices, and certainly not anything that might inspire false hope of exports like the DNO one has.
If our company publicly states its doing well, it weakens their hand when explaining why we require higher than normal profit return's . Better to say nothing, and then let us all know when and if crude exports are starting, when its done due to having far too many false dawns on this already.
It will come fellow holders, and even if it doesn't , we can hold for the new contracts in 15 months.
Hi Morbox,
Good find, wonder if my old company XOM is there as its headquarters are in Houston. However they have pulled out of Iraq mainly due to the expected backhanders that all the Iraqi officials expect for doing their base job. Makes it impossible to comply with strict company ethics standards when they wont do anything unless given additional incentives which is a generous payoff. We are not talking a dollar or two for carrying bags , but blatant demands for serious sums such as permission to drill such and such wells with supporting infrastructure. Refuse and it sits in their in tray fore ever. Time is money for all western companies and they know it and play on it.
Glad to see they are looking at gas integration projects. The hardware for these is very expensive and it wont be cheap but they most certainly do need it, thats if you want to clean /treat and process the gas and not just re-inject it.
Exporting it collectively to Turkey and then into Europe would be best, and I'm sure Turkey would love to get involved but they wont do it for peanuts, and a good starting position would be getting Kurdish crude flowing again.
Its important to note that although SOMO has stated the the IOC's get more than the current awarded contracts and they require a law tweak to pay the rate, they have not said that the amount the IOC's receive is unfair. No one is looking for flaws in our current contracts and we should not go down this route at all. lets hope we here something substantial soon.
For me this is a 5 year hold, while Greggs continues to expand its number of profit generating shops, whilst controlling the whole production line.
Dividends are nice at 2%, however think investors must lookahead to when the shop targets are reached and more profit gets rewarded to its shareholders, either in divi or buyback form. The company is most certainly a cash generating machine with most of its cash being used for store expansions.
where they have expanded we see a regular and loyal queue of customers who now use Greggs on a daily basis, for work snacks and lunches rather than the older traditional home made sandwiches. many have commented that they see queues of hardworking council workers at 6am, getting food for the day which is brilliant for product sustainability as its becoming habit changing.
I don't believe that any party will try to break GKP's contract by going into the nitty gritty and trying to claim this or that. Its a scaremongering tactic only. They would have to do it with every IOC in Kurdistan. This is at a time when Iraq and Kurdistan are trying to work together and get more international investment into the country. What kind of message would that send to any likely suitors.
One question I'd like some help with, and that's putting a rough value to Turkey of getting imports from Kurdistan going again. Does seem Baghdad may have tried to circumnavigate Kurdish crude by trying to mend the alternative pipeline and send crude to Turkey that way cutting out the Kurds and IOC's.
However apart from problems keeping it flowing through Kurdish territory, I expect Turkey views it OK as an extra, but not sufficient recompense for Kurdish crude losses, to warrant opening the dam sluice gates.
Apart from the Turkish owned export pipeline which carries transit fees, Knew Turkish companies or wealthy Turkish citizens hold strong positions in IOC's. Can anyone shed light on how strong?
Hi Theoryman, you pose two questions which I expect they are asking. "Why should the FGI now have to pay off the excess for the rest of the lifetime of the contract". Well its all about base risk, and any investor here since the start is certainly not awash with profit that's for sure. However its more about image if they want overseas investment for anything, you cannot try to change contracts mid term just because some feel the original terms were too generous originally. World of difference in extracting easy oil from already producing wells with access and some infrastructure already built, from have literally nothing at all.
This is at a time when they are trying to get foreign investment in, it sends wrong message to any observer hoping to invest in Iraq in order to make a decent profit.
Very few companies invest in Iraq because they love the people. putting up with the poor living standards, hygiene, lack of electricity, high crime, extortion, need for constant security, tough working conditions and harsh climate with Islamic rules is only done so for profit, so those doing it expect a decent return.
If they don't think this is true, just look at the exodus of western companies from Iraq. They know the truth, they are just trying it on the way some thieving Arabs often do. Could quote plenty of other examples and not singling out Iraq or Kurdistan, but you find it in every Arab nation that any frequent and world wise traveller will confirm.
We have 4 separate parties, the IOC's, Kurdistan , Baghdad, and Turkey all in the mix.
Each will have to surrender something in order to obtain steady exports of crude. None wants too, but after a year of inaction all sides hopefully understand that flexibility and trust is required.
1.Turkey will have to give water, and its no small thing as it will cost them dearly in electricity production while they have a chronic water shortage. Also blamed is climate change for this, but more probable is over extraction. Turkey wants Kurdish crude and with current contracts as they part own some companies and get a couple of bites from the crude export cherry. Its more lucrative than water, and might lead to gas exports as well.
2. Kurdistan... Might have to surrender crude control to SOMO, and lose out on backhanders to tribal chiefs. Baghdad wants control of all crude produced not just exported, as they know lots of backhanded deals currently taking place.
Reward will be more regular payments from Baghdad, to its employees and not "ghost employees".
3. Iraq...Dislikes and distrusts the Kurds, and would probably live with additional loss of crude sales just to try and bankrupt them. However seriously suffering water shortage so desperate for deal with Turkey. Fears population unrest from farmers unable to irrigate and polluted water used for drinking.
Sounds crazy but built a nice new large hospital but discharges all waste untreated into rivers used for drinking , then hospital fills with local people made ill by the contamination.
Iraq uses dilution as a method of controlling pollution, so wants more water flows.
Iranian influences still may scupper any deals by stopping legislation to pay the IOCs' more per barrel.
4. IOC's, owed millions in back payments and for crude already produced and sold. may have issues getting these payments. Wants their contract conditions upheld and not financially diluted.
So all in all a bit of a nightmare to sort out, and only takes one party to fail to fully agree and not implement and it all falls apart again.
perhaps a 10% chance of achieving something in my book.
For me looking at our companies political future this is the way I currently see it.
Erdogen is no fool and Baghdad listed water issues at the top of the meetings agenda. No formal agreement was reached, and notable that unlike last summer we are not seeing a deluge of water being released from Turkish dams "as another act of good faith". /they did that last year and by solving the Iraqi water shortage, it enabled them to then stonewall talks for a year, until the issue appears again as the dry season looms this year.
https://www.rudaw.net/english/middleeast/21042024
However Erdogen then visited Kurdistan, where crude exports were top points of discussion with water reduced to second place. Turkish investments in Kurdish oil companies and export is very heavy and they also want Kurdish crude flowing again to Turkey, as it makes them a lot of money at a time of financial hardship and rampant inflation.
https://www.rudaw.net/english/middleeast/19042024
Now we do have more committees set up I expect as a result of this visits looking at ways to integrate Kurdish exports into Iraqi law to allow the crude to flow again.
https://www.rudaw.net/english/kurdistan/030520244
However I join with fellow investors here in being highly sceptical of any success, and hope to be proved wrong. for the following reasons.
1. they have already carefully covered all this ground before.
2.They know they have to tweak/amend Iraqi laws to enable larger payments.
3. IOC's not being currently included in discussions...Are they actually serious or just playing the normal lip service.
4. Iranian judges control statute, even if the commitee recommend/agree to tweak the law, can easily be delayed by those with Iranian views in power, exactly what they did at the start of this year.
I expect its going to be a very dry year in Baghdad this year.
At least we do have a couple of officials now saying that the export position will be sorted out. I'm also in the sceptical camp on this one and look upon it as a brilliant bonus if it happens but most certainly prepared for a 15 month wait till current pipeline contract expires if nothing but biscuit munching and hot air comes of it. We know its a tactic employed too often by Baghdad when pressure on them builds and in this case from Turkey and Uncle Sam. However we have not had one jot of evidence that they have in any way accepted our contracts, or even going to shift from a paltry $6 per barrel of crude.
Could well see the local crude prices paid rise a lot more as retail diesel and petrol prices have just risen a full 30%.
https://www.thenationalnews.com/news/mena/2024/05/01/iraq-fuel-petrol-prices-cost/
I think we have to follow the money here. We produced the crude oil and it was sold (its not still in Turkish tankage), and the proceeds were taken by the KRG, and although they know they owe us 151M which is our rightful dues, they have wrongfully blown the money elsewhere. What can they now do.
1. GKP to have "free carry", taxes, rates, etc to help against debt.
2.Also the KRG do get a decent percentage of the value of the crude produced, possibility that they forfeit this income going forward until debts repaid. will mean more to gkp.
Does seem like Iraq is moving much more towards fundamentalism, with new laws proclaimed which would by western standards seem an outrage and would cause uproar if introduced here.
https://www.reuters.com/world/middle-east/iraq-criminalises-same-sex-relationships-with-maximum-15-years-prison-2024-04-27/
Bit of a shame as it makes it harder to do business with them. Its been frowned on in many Arab countries for years but fallen short of imprisonment.
Makes sense Mendoza,
Also signals a very important points which are very significant indeed.
That is firstly the KRG recognise a financial obligation to the IOC's. (not theft), secondly its demonstrating a willingness to repay, even though they are being financially squeezed currently.
it also helps us out by reducing ongoing costs.
Dana gas also owed 151M in back payment. Not just those producing crude oil.
The site has been attacked twice before with rockets, once causing no issue and the second time causing a small fire, however having 4 men killed this time is dreadful and does reflect increasing effectiveness of longer range Iranian terror weapons.
Without wanting too, it will probably cause increased demand for heavy oil as many in Kurdistan used to the frequent powercuts often have old diesel type generators as backup. This will keep the local teapots full for sure, churning out rough cut crude, via flash distillation.
https://www.thenationalnews.com/business/energy/2024/02/08/dana-gas-profit-fell-in-2023-on-lower-oil-and-gas-prices/
True bdgm,
I alluded that Iran was more likely responsible and it wants Iraq to become dependant on it and control it. That was without any definitive proof. However just now released actual filmed footage of the attack using an Iranian drone.
https://www.kurdistan24.net/en/story/34708-Exclusive:-Surveillance-footage-reveals-dramatic-drone-attack-on-Khor-Mor-gas-field