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Talk about grasping at straws.
A presentation from 2007 - and every one of these "alternatve routes" is followed by a question mark!
Get real...

What follows may be considered by some as boring history, but believe me it is VERY relevant to the ongoing and complicated pipeline discussions between Iraq and Turkey. I offer it as a counterpoint to those who state that the decision awaited is a simple and straightforward one.
Turkey financed their portions of the expensive (twin) Iraq-Ceyhan pipeline from Ceyhan to the Turkish border at Ovakoy; Iraq financed their (much shorter) portion from the Turkish border down to Kirkuk.
The 2010 revision (to the original 1973 pipeline agreement, as subsequently amended July-1985) incorporated a modified tariff structure as follows:
Article 3 “Throughput Capacity and Minimum Guaranteed Throughput”
3.1 The throughput capacity of ITP is (70.9) MTA
3.2 The Iraqi Side undertakes to deliver the following Minimum Guaranteed Throughput to the Turkish Side via the ITP:
2010 22MTA
2011 27MTA
2012 32MTA
2013 and beyond 35 MTA (MTA = Million tons per annum)
If the existing 70.9MTA throughput capacity of the pipeline is reduced to a quantity for any reason that is not attributable to the Turkish Side, the Minimum Guaranteed Throughput that the Iraqi Side shall deliver to the system nevertheless remains as above. Nothing, except force majeure conditions that are mentioned in the Agreement and this Amendment, shall prevent the Iraqi Side from complying with its commitments as provided in this Article. The Minimum Guaranteed Throughput shall remain valid throughout the validity period of this agreement.”

The Tariff & Payments Structure of the July-195 Amendment was also revised and agreed in the 2010 revision, as follows:
$1.18 / bbl up to 22MTA
$1.15 / bbl up to 27MTA
$1.13 / bbl up to 32MTA
$1.09 / bbl up to 35MTA
$1.03 / bbl up to 22MTA
$0.96 / bbl up to 55MTA
$0.94 / bbl up to 60MTA
$0.90 / bbl up to 70.9MTA

Article 4 “Tariffs and Payments” sets out a Tariff Indexing Clause as follows:
“The tariff of transport in article 4.1 above shall be updated every (5) years time period considering 1st January 2011 as the base year for the first (5) years period. The tariff shall be adjusted based on the United States of America CPI-U (Consumer Price Index All Urban Consumers – www.bls.gov) annual data.”
Article 8 of the August 1973 Agreement was completely amended in Clause 4.3, as follows:
“The remuneration mentioned in Article 4.1 above shall include transportation cost, labour cost, repair and maintenance costs of the systems, all kinds of system renewal expenses, all of the costs regarding transportation and loading of Crude Oil, protection charges, duties and taxes. Services that are rendered to the tankers such as port services are not included to the amount.”

My Notes: I calculate current KBT as approx. 7 stb / ton, so 35MTA equates to ca. 245MMstb pa or about 670Mbopd.

@Armas,
that conclusion would perhaps be a bit premature - but it's disconverting to say the least.

Re continuation of as-is implementation of the Kurdish PSCs.

If Baghdad says the pipeline will only be opened if your foreign oil companies agree to a revision of their contracts, there would appear to be nothing stopping the KRG/MNR from declaring force majeure, perhaps frustration, on their PSC contracts with the oil companies presently active there.

Should one of the Contracting Parties (KRG/MNR) be unable to perform their obligations due to such a supervening event beyond their control (Baghdad saying N0), and should that result in continued production by the oil companies being inadvisable, commercially impracticable, illegal or impossible, then it seems pretty clear that your (oil company) choices are extremely limited...

Hi Cookie, thanks for that.
2 things immediately jump out at me:
A. (3)...oil funds shall be deposited....and only the KRG shall have the right to spend them.
B. (1) Oil sales must be returned to SOMO.

Sticking points indeed...

According to the revised sovereign pipeline agreement dated Sept-2010, Iraq is obliged to deliver a MINIMUM throughput of 35MTA.
Assuming a KBT of approx 25API, this equates very roughly to 244,000,000 stb per annum or 667,000 bopd.

The agreement states quite explicitly that nothing, except force majeure, shall prevent the Iraqi side from complying with the agreement.
The pipeline tariff for 35MTA (indexed of course) is/was clearly stated (then) as $1-09/stb.
Putting aside the DAESH years, the disagreement with the Semi-Autonomous Region of Kurdistan can hardly be termed a force majeure condition.

Just for your information...

Error
Should of course have read "PF-2 has better road links"
Apologies!

@TM,
1. PF-1 has better road links...to the KAR Refinery "just down the road".
2. The crude grades from PF-2 are well-liked by / more suited to KAR.
3. The cluster of wells feeding PF2 react very badly to being shut-in.

Re the possible re-jigging of the Production Sharing Contract:
Assuming a healthy forward loading of Capex Costs, the current PSC, using say $80/bbl Brent and 50MbopD, generates about $5/bbl Profit Oil (depends on what WI% and Capacity Building Tax etc you plug in to your model).
This is more than double what many of the TSCs in S. Iraq generate.
It therefore seems quite likely that, as Baghdad takes the reins, either a full-blown TSC will be forced upon the Kurd oilies or a hybrid version - both of which will generate less Profit Oil per bbl.

From Euro-Petrole article couple of days ago:
DNO ASA. The Norwegian oil and gas operator, today reported that cumulative oil production from its Peshkabir field in the Kurdistan region of Iraq has broken through the 100 million-barrel milestone less than six years after startup. The field was initially estimated to contain proven and probable reserves of 75 million barrels of oil commingled with associated gas.

In 2020, DNO completed a USD 110 million project to capture, transport and inject the commingled gas into the neighboring Tawke field to achieve the triple goals of reducing greenhouse gas emissions, enhancing oil recovery and saving gas for future use, in what is the first and only such project in Kurdistan.

“Even though Peshkabir has already delivered more oil than we thought it held, we now project that there are at least another 100 million barrels still to be produced from this prolific field,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani. “Team DNO has succeeded in getting oil out of the ground in record time and at industry beating costs while adjusting drainage strategy as understanding of the reservoir grows,” he added.

Mr. Mossavar-Rahmani went on to say that DNO firmly believes there are more Tawkes and Peshkabirs in Kurdistan and that the Company is well positioned to find and tap them. Cumulative oil production from DNO’s currently operated fields is approaching 440 million barrels.

Development of the Peshkabir field continues with the drilling of new wells and initiation of water and gas injection pilot projects to assess additional oil recovery potential. Earlier this month, field production was reduced from about 60,000 barrels of oil per day (bopd) to 43,000 bopd for maintenance workovers, including to replace downhole pumps. Once completed, the Company expects to recover full field production by end April and retains its 2023 production projection of 100,000 bopd for the Tawke license. DNO operates and has a 75 percent stake in this license containing the Tawke and Peshkabir fields with partner Genel Energy plc holding the balance.

The ruling, so we are informed, covers only the period from 2014 thru 2018.
It is therefore to be expected that compensation payment for the later years, 2018 until now, will - in view of the very different (higher) crude prices, be critical in underpining any potential agreement between Iraq and Turkey

Hi Cookie, thank you for that.
Did you notice the Argus report re the ICC ruling just posted? Wonder how this will influence things - I see they're already celebrating down in Basrah:
Iraq wins arbitration over KRG's Turkey crude exports
Published date: 24 March 2023
Share:
Iraq tonight was officially informed by Turkey that an international arbitration court ruled in its favor in the long-running case against Ankara over Kurdish crude exports, a source with knowledge of the matter told Argus, in yet another blow to Iraq's semi-autonomous Kurdish region.

Turkey also said it will not allow shipments carrying crude from the Iraqi Kurdistan region to leave its coastal port of Ceyhan without the consent of the federal government in Baghdad, the source added.

Where does it state that the PSC (term) will be extended?

Good morning,
Approx $67Mio if you use a different $/bbl number.

...the hardware assets (by dint of their Capex costs having been pretty well completely recovered by CO returns) are effectively owned by the KRG, and not by the company?
The contract to develop, the PSC, is of course another matter but even that is thrown open to question when this particular question is answered.
Surely the answer is by how well the company is managing its resource - their ability to produce oil from the SH field?
How open then, once the hardware asset has been removed from the equation, is THAT particular evaluation to be measured - taking into account what other potential developers might claim to be able to achieve?
Once the 55Mbopd target has been achieved, say by end-23, new perpectives open up...

@buzzthomas, to your question:
Shaikan was declared a Commercial Discovery in August 2012.
The Shaikan PSC of 6th Nov 2007 defines the Development Period of the Contract as follows:
A. Clause 6.10. Upon declaration of a Commercial Discovery of Crude Oil, the Contract Term shall be 20 years.
There is an automatic right to a 5-year extension to this period, but it is not clear if such extension has to be requested.
B. Clause 6.12. If, at the end of the initial 20-year Development Period, commercial production of crude oil is still possible, then the Contractor shall be entitled to a further 5-year extension upon request – such request to be made in writing at least 6 months before the end of said development period.
C. The Contractor has the right to terminate production operations at any time during the contract term, subject to giving 90 days’ notice to the Government.

Re A: The first period expires in Aug 2032, in just over 9 years time.
Re B: "commercial production" is not defined and can be interpreted in various ways - considering Capex requirements, etc.

Just for clarity, the assets referredto are those physical assets such as Production Facilities (PFs), hole casings, flow lines, production strings, downhole pumps, wellhead pipework and asemblies such as christmas treess, BOPs, etc, etc.

PSC Clause 20.2. clearly states that title to asets will pass to MNR when their (asset) cost(s) have been completely recovered.
The closer we get to that point the greater the leverage over company decisions the MNR will have.
Unless...the assets are leased, or held by an associate company or contractor.

Cash currently sitting at about $127M - not $185M.

The 2/3 crude streams (Genel/DNO/GKP) are not comparable - neither in terms of quaility (API) nor export price achieved.
I reckon the additional hit to GKP's $/bbl achieved could be about $8/bbl.

The only positive to take out of the price re-basing is that refineries sometimes have to compete quite hard to get the heavy crude they need, so at some point(s) in the future that additional downside will decrease - or even disappear for a short period.