The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
If you can be bothered, take a look at P5 of the AGM Presentation - the graphic showing field output over the last 12 months, with notes ref the various technical issues affecting production.
Look closely at the period Oct-21 thru June-22.
What does that tell you?
Start thinking...
Take off the sunglasses, you cannot see properly.
Output today is the same as Oct-2021.
The Eastern side of the field is very problematic - that cluster of wells to the N of SH2.
Only going one way now...
NOT a good update.
Apart from confirming the dividends, #15 looks to be a poor producer, as does #14.
Concerning to see further confirmation of water handling being required to allow production increase.
Output still stuck at 46Mbopd.
Interesting formulation: "...we continue to progress towards sanction with the MNR".
FDP still not agreed
I expect the SP to go South.
I read that the US will bring their suggestion "let's fix a maximum oil price" to the table next Sun at the G7 meeting.
Should be interesting...
Why so sour Opu ?
Re the "constant knocking...", I think you're getting confused again.
Re the "more negatives...", you are definitely confused - it's called realism.
Re the "...why we shouldn't be holding", no-one said that.
You appear to be very confused.
Play "toppy uppy" again, it soothes you.
Why so sour Opu ?
Play your little "toppy uppy" song again!
Whatever the KRG:FSC state of play, the company will be forced very soon to give more detail on the increased risk associated with operating the contract.
Just how carefully GKP highlights the issues, and what, if any, financial or operational qualifications may have to be made, will determine how the market perceives the seriousness of the whole thing.
The Note #29 "Subsequent Events" appended to the last FYR of March 30th is quite insufficient given the seriousness of the current situation:
"Iraqi Supreme Court ruling
In February 2022, the Iraqi Supreme Court ruled that the Kurdistan Region of Iraq Oil and Gas Law is unconstitutional. The ruling also provides that the Iraqi Ministry of Oil may pursue annulment of Production Sharing Contracts issued by the KRG. The KRG responded that "it will take all constitutional, legal, and judicial measures to protect and preserve all contracts made in the oil and gas sector". The ruling has not impacted the Company's operations and the Company is continuing to monitor the situation closely.
Export route availability
The Company currently exports all of its crude oil through the Kurdistan Export Pipeline, which is 60% owned by Rosneft. As a result of Russia's invasion of Ukraine on 24 February 2022, the Company is monitoring the evolving sanctions situation as certain specific sanctions on Rosneft could impact the Company's ability to access this pipeline."
Reported by Ruxandra lordache for Argus Media:
Russia's involvement in Iraqi Kurdish crude trade has dwindled in recent months, opening the door for a new trading firm to enter the previously tight selling circle.
Trading and shipping sources say Russia's state-controlled Rosneft is no longer selling term supplies of Kirkuk blend crude, which it previously procured from the Kurdistan Regional Government (KRG) under a Switzerland-based entity called Energopole.
Only a handful of sellers are typically involved in Iraqi Kurdish crude trade, most of them securing the oil in term deals. Energopole is one of four trading firms understood to have a contract with the KRG at the start of this year, alongside Vitol, Trafigura and Petraco. Glencore sold Kurdish crude in previous years, according to market participants.
Some traders say Energopole's absence from Kurdish crude trade is linked to EU sanctions against Russia imposed following the invasion of Ukraine in late February. The extent and duration of the company's withdrawal are not clear. Energopole has yet to respond to a request for comment.
Trading sources say the KRG has placed some spot volumes with a new trading firm — Dubai-based BGN International. BGN International's director Emin Imanov told Argus that the KRG suspended Energopole's contract due to sanctions, although this has not been confirmed by either party. "KRG has more spot crude barrels available to sell. We purchased some available spot volumes," Imanov said.
KRG crude offers a sour alternative to Urals for buyers in the Mediterranean seeking to avoid Russian oil. But many refiners are concerned that buying from the KRG might endanger their relationship with — and their Basrah crude term supplies from — Iraqi federal state oil marketer Somo.
A long-standing feud between Baghdad and Erbil over the marketing of Kirkuk crude intensified in February, when Iraq's federal supreme court ruled that the KRG's oil and gas law is unconstitutional and demanded that Kurdish authorities hand over "all oil production from all oil fields in the Kurdistan region" to Baghdad. Iraq's federal oil ministry has since approached international oil companies operating in Iraq's semi-autonomous Kurdish region to offer them restructured contracts. The KRG has in turn repeatedly rejected the court ruling.
Argus tracking data indicate that the KRG exported around 400,000 b/d of Kirkuk blend in January-May, while Somo marketed just 70,000 b/d of the grade over the same period.
THIS is what BlackRock does - they trade it.
(Data taken from GKP website):
Date Institution Prior Latest
01/06/2022 BlackRock <5% 5.08%
23/08/2021 BlackRock 5.03% <5%
13/08/2021 BlackRock <5% 5.03%
25/06/2021 BlackRock 5.03% <5%
11/02/2021 BlackRock <5% 5.03%
02/04/2020 BlackRock 5.12% <5%
12/03/2020 BlackRock <5% 5.12%
11/10/2019 BlackRock 5% <5%
12/08/2019 BlackRock 4.99% 5%
07/08/2019 BlackRock 5% 4.99%
05/08/2019 BlackRock <5% 5%
03/07/2019 BlackRock 5% <5%
24/04/2019 BlackRock <5% 5%
17/04/2019 BlackRock 5% <5%
12/04/2019 BlackRock <5% 5%
****eye,
yes, that is what I am saying.
Read my 15:02 post and link today for a more thorough background to the issue - but there are many, many articles out there explaining how it came to be.
There's a very good article in the Washington Post from Apr-21 which sets out a lot of the background history to this FSC Art.92 stuff:
https://www.washingtoninstitute.org/policy-analysis/one-less-hurdle-iraqi-elections
It's a mess, isn't it!
According to what has been published, Art 92 of the 2005 Iraq Constitution states:
First: The Federal Supreme Court is an independent judicial body, financially and administratively.
Second: The Federal Supreme Court shall be made up of a number of judges, experts in Islamic jurisprudence, and legal scholars, whose number, the method of their selection, and the work of the Court shall be determined by a law enacted by a two-thirds majority of the members of the Council of Representatives.
It is widely reported that such a law, to be passed by a two-thirds majority of the Council of Representatives, has NEVER been passed.
Good morning TM,
I agree with the general thrust of your post but there is one factor that you do not address.
At the moment there is no functioning government in Iraq - despite the elections having been held last Oct. The attempted move away from religiously defined blocks (essentially Iran-backed Shia vs Sunni) both trying to use the Kurds for their own power-plays and towards what we in the West call consensus politics is plainly not working.
Although mostly Shia-based, Muqtada Al-Sadr's block seemed to be more interested in getting improvements for the Iraqi common man and, with its withdrawal, it's unclear if a consensus gov can be formed at all - already there is talk of new elections. The FSC opinions, without a functioning government, able and willing to implement them, are pretty toothless at the moment.
As I see it, the real danger might come from hotheads, military units aligned with one or other block, determined to make a point.
I see Aljazeera is reporting that Muqtada al-Sadr’s block went ahead and resigned yesterday.
Al-Sadr, last Thursday, had urged the MPs from his block to ready their resignation papers in a bid to break the parliamentary deadlock and create space for the establishment of a new government.
For the life of me I cannot see how such inability to create a functioning government could even think of progressing or resolving the Kurdish O&G issue.
Old news...
Too much Turkish (and private co.) influence at Genel.
@TM,
if only it were just up to JH alone, but he cannot just decide to drill another N wells here or there.
The consortium's Management Committee has a LOT to say about what gets done - that 3rd member (MNR) has the detailed overview of ALL data being generated by the operators in the KRG region and he / they will want to know exactly WHY such changes are considered necessary and if he/they do not agree with you...
The largest, currently producing oilfield in the KRG region (fully in the hands of the KRG-MNR at present, and operated by KAR Group) is the Khurmala Dome - the northernmost of the 3 Kirkuk Domes, Baba, Avana, Khurmala.
The field, discovered around 1950, was producing albeit at a low rate prior to 2005 and was at that time under the management of the North Oil Co.
Exact output figures are hard to come by, but currently estimated at approx 180,000 - 200,000bopd.
This is the real backbone of KRG output.
I see MOL are already talking to Croatia about increasing the capacity of the Adria pipeline to deal with increasing flows should the Druzhba pipeline be blocked, so several alternative routes to HU.
Our Shaikan partner, MOL, has substantial refinery interests in Hungary and is an active processor of Russian crude. The refineries have relatively high Nelson Index and could certainly manage the (heavy) Kurdish Blend. Existing port facilities at Trieste and pipeline links thru Austria and Slovenska would do it.
One important issue, however, remains the legality of the Kurds using the Ceyhan-Iraq pipeline which is subject to a Sovereign Agreement between TR and IR. At the moment the Kurds use forward financing deals with the major trading houses to get over this (heavily discounted pricing and sweeteners to the Turks) but it is questionable if the EU / Brussels would be willing to just turn a blind eye to this and they might demand some trade-offs.
From what I have read the Basrah heavy crude seems to be the one being discussed.
Assuming the field output does reach 50Mbopd by year-end (or even that fabled 55Mbopd) and if crude remains at these very high levels, SH will throw off an incredible amount of cash each month...until the R-factor / Cost Oil issue bites.
It could well be that the MNR, under an unqualified- and poorly performing management team, is trying to be too clever by half - and slowing the FDP approval process to see what happens. What issue might be driving that remains unclear.
A big reduction in CO receipts, only partly compensated by increased PO receipts, will put rather a spotlight on GKP management. Any attempt to splash out on even more Special Dividends will have to be balanced by the realisation that, as we enter 2023, the era of cheap loans and bonds will almost certainly be over - certainly for Iraq-based enterprises. That 10% coupon might grow very quickly to 14% or so.
Interesting dilemma !