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Give us your reasons for not believing.
If you do not believe that the contract ends in 2037 as stated in the published PSC (with, as I have detailed in my posting, the possibility of requesting an additional 5-year extension), why on earth should anyone even attempt to start an informed debate with you?
The missing "r" was purely a typing mistake.
If you do have the PSC, are you then saying you don't believe what it says?
As far as I can see there is no current debate about the "Board's position in the context of current issues".
Stracat,
I don't mean to obfuscate, but it seems important to define one of the main contract parameters.
The other main contract parameters (CO and PO determinations) are being jiggled as we speak.
I will post up my thoughts on these matters quite soon.
Why don't you have the PSC? - I downloaded it from the MNR website as soon as it was posted there (had to screen capture every single page due to the manner in which it was presented at the time).
Straycat,
GKP's PSC expires in 13 years (2012 + 20 + 5 - 24)
To obtain another 5-year extension, to 2042, the company has to put in a REQUEST six months before end of period.
There is absolutely NO guarantee that said request will be granted - it might not even be wanted, who knows?
Your "28 year expiration date" remark is disingenuous...
C+++*eye,
PSC was signed & dated 6th Nov 2007. Shaikan was declared a Commercial Discovery on 1st Aug-2012
As taken from the published PSC in front of me:
Development Period
6.10 If the CONTRACTOR considers that a Discovery of Crude Oil and any Associated Natural Gas is a Commercial Discovery, the CONTRACTOR shall have the exclusive rights to develop and produce such Commercial Discovery, pursuant to the terms of this Contract. The Development Period for a Commercial Discovery of Crude Oil and any Associated Natural Gas shall be twenty (20) years commencing on the declaration of such Commercial Discovery by CONTRACTOR, in accordance with Article 12.6(a), with an automatic right to a five (5) year extension.
6.11 (Refers to discovery of Non-Associated Natural Gas )
6.12 If Commercial Production from a Production Area is still possible at the end of its Development Period as defined in Article 6.10 or 6.11 then upon request, the CONTRACTOR shall be entitled to an extension of such Development Period under the same terms as those provided in this Contract. Such request shall be made in writing by the CONTRACTOR at least six (6) Months before the end of the said Development Period.
The terms of such extension of the Development Period shall be:
(a) Five (5) years for Crude Oil and any Associated Natural Gas, and/or
(b) Five (5) years for Non-Associated Natural Gas
For FY2022 the equivalent figure was $25.009M – so the 2023 figure of $7.522M is a reduction, reflecting the company's ability to pay in the good year ‘22 and the inability (unwillingness?) to do so in the bad year of '23 (and at least reflects the willingness of the KRG to put the payment to one side for the moment).
As stated, the “owing” of this $7.522M sum has yet to be reflected in the financial statements, but it will be offset against the outstanding sums due to be paid by the KRG.
So, at this moment, $152M - $7.522 (give or take), indicates Co is still owed ca $144M (end-Dec-23). Depending on when things return to normal and revenues increase as hoped, this sum could increase and continue to be carried forward or it could be whittled down to zero inside a year.
As I see it.
Re expiry of existing pipeline agreement.
Does anyone really believe that Baghdad would stand idly by and let the KRG sign a pipeline agreement with Turkey - one which utilizes the existing Faysh-Khabur - Ceyhan pipeline, an agreement which would give the KRG enormous leverage over the only pipeline available to export Iraq's oil to the Med?
I do not believe it for one minute.
@nobull,
don't take it personally, it's only business.
The central government is interested only in re-establishing their rights in KRI as sovereign authority, with SOMO in charge of all external sales and marketing of crude oil & derivatives.
IMO it's going to get even messier, with the KRG trying to wriggle out of their payment obligations.
As per the remarks on P18 (Route to market):
"It is expected the Federal Government of Iraq ("FGI") will control the marketing of Kurdistan's crude oil once pipeline exports resume"
Not all KRI produced crude will find its way into the export pipeline.
Shafaq reported this morning:
"Shafaq News/ Iraqi government official indicated that the resumption of oil exports from Kurdistan to Turiye via the closed pipeline, inactive for more than a year, faces extended delays as negotiations persist with the Kurdish government and oil producers.
Basim Al-Awadi, the spokesperson for the Iraqi government, said in a press release that ongoing discussions between companies and the Iraqi Oil Ministry are anticipated to be protracted.
This is because Baghdad aims to establish a direct rapport encompassing production volumes, export procedures, and pricing mechanisms.: Al-Awadi clarified, adding that there is no definite timeline for the conclusion of negotiations with foreign oil entities operating in Iraqi Kurdistan."
I post the following just as a reminder that not everything you read on ME websites can be taken as gospel.
From Shafaq.com (English) on 19/4/24, al-Sudani speaking to Biden:
"ISIS is not a threat now to Iraq and most of its members are now hiding in the mountains in caves in the Sahara Desert..."
As putup tangentially says, the future will be no reflection of the past.
Do not forget that, as SOMO are now in the driving seat and seem determined to reintroduce the Kirkuk Export Blend, only a fraction of Shaikan's output can be accommodated in that blend (it's simply too heavy and pulls down the export blend API). The majority of future revenue therefore will be realised in the local market - with consequences for agreeing the FDP and associated large Capex projects. Note also that SOMO and NOCo will, to a great extent, now determine how that FDP will look, with the MNR relegated to a subsidiary role.
Words are important.
It is disingenuous in the extreme to claim that the PSCs have not been seen or given to the Baghdad authorities.
The MoO took copies of ALL the PSCs that were made available (in the early days) to investors by the KRG/MNR; I know this for a fact.
What the Ministry does NOT have - and nor do investors - is copies of all the side protokols, agreements and understandings that put real meat on the bones of those PSCs put into the public domain.
ALL sides are being economical with the truth...
Do you understand the words "...no direct correlation"?
I don't understand your sentence beginning:
"Secondly, the refiners compete with other local sources of crude; and do you really argue that if that was priced at $120, they would still not pay a single cent more...".
When you say "..if that was priced at $120.." what do you mean by THAT?
I'd like to respond properly to your posting but you're confusing me...
The refinery yields obtained from processing Tawke, Peshkabir, Swara Tika and Atrush crudes are all very different from that of SH crude and cannot be compared using a simple $/bbl metric as you seem determined to attempt. Sorry, but that's how it is.
You say "...they also sell some volume directly to refiners" - where else do you think they are selling it? Do you think they are paying $15/bbl for trucking it to Ceyhan?
Local prices also fluctuate, no question about that but it's wrong to tie these fluctuations to Brent. If some other local fields were diverting their supplies S to Basrah, as has been reported, that would starve the refineries somewhat and help explain the rise?
Graph the internal (Iraq) prices for diesel and petrol for the last 10 years against Brent before you spout off...
There is NO direct correlation between external (i.e. Brent) prices and the Iraq internal sales price for crude oil.
Local selling prices for Diesel, Petrol and Heating Oils are determined by Government pressure / guidance, not by any international criteria.
GKP's achieved $/bbl price will be determined by local supply & refinery demand criteria, nothing else.
Stick with the $25/bbl for the moment...
Captain,
thank you for posting that Rudaw inteview with KRG Cabinet Sec. Rahim.
The following section caught my eye and, if a true representation of what was said, needs some serious thought by investors:
"There was one point of disagreement on the oil issue: the wages of the companies. Has any agreement been reached on this issue?
First of all, the Kurdistan Region does not have a national oil company to force its companies to agree to the money determined by the Iraqi oil ministry, SO THIS PROBLEM IS MORE BETWEEN THE OIL COMPANIES AND THE IRAQI OIL MINISTRY, not between the KRG and the federal government. In the latest step, we took representatives of all companies to Baghdad and met with the oil ministry under the supervision of the finance committee, and provided any documents they requested. THEREFORE THE PROBLEM IS NOW BETWEEN THE COMPANIES AND THE IRAQI OIL MINISTRY, although unfortunately the suspension of oil exports from the Kurdistan Region has caused more than $500 million monthly loss to the Iraqi treasury."
(CAPS are mine)
That reads rather like "It's not my problem lads, it's up to you to sort it out".
IF the old pipeline (Kirkuk-Baiji-Mosul-FK-Ceyhan) has been repaired (I believe most of the damage by DAESH was to the 2 pumping stations) then Baghdad will still have to use the FK Export Pumping and Metering Station as it’s the only one available to my knowledge.
As KRG claims the FK station is within their territory, how then will that use by SOMO be achieved - by force or by agreement?
Using force cannot be ruled out and is what is wanted by some hardliners in Baghdad, but may not be necessary at the end of the day.
Agreement will involve compromise by both sides.
The 2 Issues that I see both impinge on the APIKUR / PSC discussions and -arguments:
Grade/Blend Quality
Partly for reasons of national pride, SOMO wish to reinstate as closely as possible the old Kirkuk Blend (ca 32-33API, S=2.5%) and they will want to differentiate between their current 3 Basrah grades (Heavy, Medium, Light) and the reinstated K grade. SOMO will determine which grades and what volumes of each will make up that export blend.
Flow Volume
The main SOMO inputs will be from the Avanna, Bai Hassan and Kirkuk formations and, assuming that a proportion (one third?) of that output will be earmarked for the Baiji refining complex for local refined product sale, we could be talking about flowing volumes from the South in that pipeline of ca 300 - 350Mbopd.
As the Ceyhan pipeline capacity is currently probably no more than 450-500Mbopd, full capacity utilization is therefore one of the factors that could be discussed by SOMO & KRG.
However, 500 – 350 only equals 150Mbopd (contribution by KRG) and that would be a big blow for the KRG/MNR – and for the local KRG producers hoping for unfettered export access.
Don’t get too excited…
Invstrat,
one of the arguments against the creation of an independent Kurdistan must surely be the hugely destablising effect this would then have on N. Syria and (mostly Southern) Turkey (leaving aside the Kurdish minority in NW Iran). Both areas have large numbers of "Kurdish" people - many of whom actively support the creation of a new Kurdish state in the ME.
The resulting euphoria that at least one part of their diaspora had finally managed it would, IMO, set the whole area aflame with unforeseeable consequences.
I don't think the USA would welcome that in the near future.