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ValueS,

It's my view that SOMO would like to reinstate the Kirkuk (Med Export) grade once again. The main contributors to that could be Baba, Bai Hassan, Jambour and Avana - possibly also Khabbaz. The qualities of each of the above crudes (API etc) are easy to find, as are estimates of their present production rates. Offtake data for local consumers and refineries is slightly less easy but can be found with some research. An estimate therefore of the potential export quality of that "Kirkuk Blend" (API and S%) can be made. Together with the volume estimates you can then see what sort of crude SOMO coul be aiming to put into the ITP.

If you then consider what other KRI crudes might be added, their API ans S%, you can see what realistic potential there is for what quantities of these other KRI crudes - assuming SOMO wish to retain the (old) Kirkuk grade quality.

The determination of that blend, as I have briefly laid out above, is very instructive and, for your own satisfaction, you should attempt it - it will open your eyes and give you some better understanding of the issues that still have to be adressed.

Good luck.

Hi SlurryScot!

Happy to confirm that I have never proclaimed myself to be an "Expert" - I'm happy to leave such assertions to my peers.

My experience, my qualifications and the depth of my knowledge have all been posted here over the years - much to your chagrin. Your own offerings, in contrast, seem rather pitiful if I may say so and that seems to disturb you.

For the record, I also do not claim to be a graduate of Harvard Business School.

Invstrat,

I think at Kirkuk BP will be focused on associated gas capture and -processing, plus rectifying quite a few badly-executed wells that have been performimg poorly.

If by a buying spree you hint at possible interest in GKP, I think that's off the table, no chance.

From the BP website today:

"Murray Auchincloss said: “This MoU builds on bp’s strategic and longstanding relationship with Iraq. We see today’s signing as an important step towards the potential further development of this critically important area. It aligns with bp’s six clear priorities and is in support of our drive to deliver as a simpler, more focused, higher value company”

The MoU signed today for Kirkuk includes the Baba and Avanah domes and three adjacent fields - Bai Hassan, Jambur and Khabbaz - in Federal Iraq, that are operated by the Government of Iraq’s North Oil Company (NOC).

Rehabilitation of existing facilities, where required, and the construction of new facilities – including gas expansion projects – together with a drilling programme at the Kirkuk fields, has the potential to stabilize production and reverse decline, returning production from this nationally important oilfield to a growth path.

The integrated redevelopment programme has the potential to bring opportunity and investment into the Kirkuk region – unlocking future downstream growth while also bringing tangible benefits to the local population, with job creation and local supply requirements.

As part of today’s MoU, bp also proposes to explore opportunities for investment into power generation and the introduction of solar power facilities to the region.

Negotiations are expected to be complete early in 2025.

The following is my understanding of how things are:

The newly-tested Kirkuk-Baiji-Ceyhan pipeline is now tested and ready – confirming what we knew was happening several months ago. This section of pipeline inside Iraq will connect to the Iraq-Turkish Pipeline (ITP) at the Faysh-Khabur Pumping and Metering Station approx. 5km from the Turkish Border, at the Ovakoy river crossing.

Exports from Iraq’s Kirkuk area fields can now take place – with or without the KRI contribution.

Any crude accepted into this pipeline, for example at the Faysh- Khabur station, will be sold only by SOMO and the export sales revenues therefrom will be credited to the Iraq exchequer. Financial allocations to the KRI will be made according to Iraq law. Theoretical PSC revenues generated by existing KRG contracts are now the problem of the KRG – not the central government. If the KRG wishes to have Kurdish crudes inserted into the pipeline, then this will be done only under certain conditions; I believe these will include:

A. Newly defined Cost Oil payback terms and Profit Oil payments. The trade association APIKUR, formed to give voice to some local KRI producers, carries no weight in Baghdad and is essentially impotent. The new terms will be far less remunerative than before but will still represent a good investment for some companies; the halcyon days and revenues of Spring/Summer-22 are long gone.

B. The accepted Kurdish crudes (crude blend) to have a defined quality, monitored and controlled by SOMO. The reason for this is simply because SOMO wants a defined Export Grade offered to the market and as approx. 66% of the expected volumes will be coming from fields with a known quality, the volumes of any added crudes that could change that quality must be managed. This has implications, potentially severe, for some of the very heavy crudes produced in KRI.

The oft-repeated mantra that this is all Iran-controlled is false; Iraq is determined to have the Kurdish semi-autonomous area back under financial control by the centre (with a few exceptions). You may not like it, you may call it blackmail and rightly curse corruption until you are blue in the face, but that’s the way it is.

The company retains a certain attraction even with only partial pipeline exports (partial volume) at a decent price, and with local market oil sales at $25-$30/bbl, but should crude prices take a severe downturn it will start to look very ugly.

Make no mistake, the air has gone out of the GKP bubble.

In my opinion.

Firstly, may I offer apologies for my earlier post which failed to reflect the most recent news re SMN’s 2025 Bond Repayment news.

SMN have settled some of the 2025 bond (approx. $47M) and managed to extend the settlement date to 2027. The outstanding bond sum will now be $202M with a 12% coupon.

Again, my sincere apologies for this error.

GKP shares most of the producing formations with SMN, and the crude grades are similar, although of somewhat better quality. Their Atrush pipeline down to the intermediate blending station is also shared with GKP.

SMN however has quite a bit of debt – a $300M bond due for repayment in July-2025. Thanks to careful management this is being whittled down by early amortization repayments, and by July-25 should have been reduce to approx. $200M.

Local sales revenues are fine and good, but unless topped up by payment of historical dues of ca $92M(?) or so, appear unlikely to make much difference to the bleak overall picture.

Cash at bank was $71.6M at end-Mar but $25.3M of that is Restricted Cash, so consider it as effectively $46.3M.

If, as appears most likely, the pipeline remains closed throughout the rest of 2024 and the receivables remain unpaid then SMN’s cash position is not going to improve much and the implications for Shamaran (think GKP 2016) will be reflected not only in its share price but will taint other KRI producing companies such as GKP. whose Shaikan field lies directly to the South of Atrush.

Bearing in mind that any SMN re-financing talks will be starting soon (if not already started), just how the SMN share price performs in the next 6 months or so may well be a bellwether indicator for GKP.

I appreciate that GKP has no debt, having gone through its own bond disaster in 2016, but mud sticks as they say.

It shouldn't really need saying, but were there to be anything negative in the "confidential contract terms" that has not been released to the market and/or the shareholders, and if such confidential contract terms, whatever they may be and whoever they are agreed with, are seen to be significantly detrimental to shareholders great and small, then there will be an almighty court case against company directors who knowingly kept such terms from being scrutinised...

When they see the light of day.

You say: "Given that the KRG oil contracts are confidential...".

As the KRG/MNR published the PSCs many years ago, do you imply that there are additional (unpublished) parts that are confidential ?

Parts that are nothing to do with the shareholders, or parts that are nothing to do with the Iraq Government?

A lot has been written about low water flows in the Tigri-Euphrates river system but I see from Shafaq news that the Duhok / Akre region rice crop this year will be a record one at ca 12,000 tons.

shafaq.com/en/Kurdistan/kurdish-rice-cultivation-surges-in-iraq's-akre-district-on-back-of-ample-water-supply

I've been here (GKP) since 2009, and the Interactive Investor board was (then) top-class. Sadly missed.

This LSE board is "not bad" IMO, but many quality contributers have either passed- or gone away. One or two of the quality contributers from ADVFN do drop in now and then however.

The ADVFN board is a sewer - sorry, but that's how I view it; the moderators / Admin appear to have no interest in improving the quality of debate, and some posters appear to have either attention deficit issues or are simply immature day traders.

All IMO.

Re: The Board's motives for buying back are a central issue.

Well, that's illuminating!

IMO the motives are quite clear; when the brown stuff hits the fan, when the revised PSC terms are announced with much gnashing of teeth and the SP heads smartly South, the BoD will be able to point at their generous recent dividends and say "...actually we managed that quite well, what are you all complaining about?".

C*eye,

I'm quite sure there is a paper trail - but not one visible to us, the great unwashed.

In view of Todd's (precarious?) financial situation we might see some movement in this area soon after his release.

Friends can sometimes "look after" such holdings for you...

Don't forget, Todd's famiy still retain the 5% Texas Keystone holding in the Shaikan PSC.

Despite it being a "a straightforward matter, done in a couple of minutes" to complete the transfer process (acc to a UK dircetor at the time) it has never been transferred to GKP.

It does make you wonder, doesn't it...

Well, the Board would hardly say we are fully valued at Xp, or overvalued at Yp would they?

The BoD think they should remain in their well-paid jobs, with obedient / acquiescent stockholders who believe every word uttered by them.

Surely that's clear to everyone?

I posted the following on 19th Mar-24, under the title: ITP Pipeline Agreemnt 19th Sept 2010.

Consider the potential implications of Article 11 of this sovereign agreement:

"...This Amendment shall be valid for 15 years as from entering into force. The Sides start negotiating the contract conditions upon request of any of the Sides two years before its termination date. In the case where there is no need for new amendment/agreement this Amendment shall be considered as extended for an additional 5 years period of time, unless a termination note is sent in writing by one of the two Sides to the other 1 (one) year before the expiration date of this agreement".

(Copied from the agreement exactly as written)

Hi belgrano,

I have the pipeline agreement - at least the one which was put into the public domain.

What sort of info are you seeking?

Rather begs the question: If the opportunists (being polite here) were able to get so many trucks for their "exporting endeavors", why weren't the oil companies able, or willing, to do the same?

Were they unwilling, and if so, why? Or did the KRG have its own agenda?

It's a rat's nest indeed.

Belgrano,

I answered this question some time ago.

The official (i.e. for public consumption) contarcts were published many years ago by the MNR via their website.

The Iraq authorities are interested in the other agreements and MoUs pertainingto these PSCs that have never been made public.

Think al-Sudani's war on corruption...

I appreciate the remarks about IEA, but you should really try to keep an open mind about crude prices.

Citigroup, for example, are currently saying that crude could (not will) drop to ca $60/bbl by the end of next year.

When such trends develop there are generally wild swings before a new floor or stable price emerges.