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Suppose the KRG sent 50k bopd internally out of the minimum 400k bopd specified in the Budget Law during one month but this 12.5% of the target was 100% of what logistics would allow.

Would they receive a payment from Baghdad of:-

A Nothing

B 100% of the budget for that month

C 12.5% of budget allocation for that month

D Less than 12.5% because the oil was sold at local rates and not on the International market.

E Some random figure that annoys every faction.

“Iraq was seeking up to $90 billion in damages, while some feared Turkey could have to pay up to $20 billion. However, Turkey managed to get out of this unscathed, with only a few hundred million dollars in fines, which will have to be eventually paid from the KRG due to an indemnity clause in the Turkey-KRG agreement.”

“Iraqi officials claim that Turkey does not want to start the flow of the pipeline until Iraq forgives the penalty imposed by the Arbitration Court.”

Yet again the reference to any fine that Turkey ended up with would be indemnified by the KRG.

Then in the second quote Turkey wants the fine, which according to the first quote it doesn’t have to pay, forgiving by the court.

This is par for the course though. Last week I read an article where one spokesman argued a point using the Budget Law and another countered the implications with a reference to the draft Oil Law.

@BB, let’s make the assumption that the pipeline does re-open at some stage but will its contents in terms of both volume and quality be as before?

Before we had the MNR and SOMO acting independently wrt one another but now only SOMO will be in control.

They have already stated that they do not want to create more alternative blends to take to the export market than is absolutely necessary.

So given what they had before they took over, where does KBT including Shaikan sit?

Now consider removing Shaikan from the KBT blend, as has been done before (2017?). The volume drops but the quality rises both in terms of higher API and lower Sulphur content. Now where does that new blend sit?

Then the question then becomes what to with Shaikan? Internal use or export, standalone product or in a blend and using trucks or pipeline?

SOMO’s role is to maximise the revenue from the whole country’s oil production, the company’s role is to maximise the revenue from Shaikan alone.

Best cases would be nothing changes wrt KBT blend, SOMO markets it and gets a great price compared to what the MNR did, or Shaikan finds a lucrative niche export market as a standalone product.

Worse case is Shaikan gets withdrawn from the blend, isn’t exported because SOMO blocks it and it ends up up fulfilling internal demand at the dreaded “local prices”.

@carpatthis, the two posts are not contradictory, in fact they fit well together IMO.

There are potentially three parties involved in any settlement Turkey, CGI and the KRG - all that differs is which two are still to reach a settlement, depending on which version you believe.

Erdogan says it’s the CGI and the KRG, CGI sources imply that is not the case but that doesn’t matter.

Turkey will not open the pipeline until a settlement is reached whoever is involved.

@belgrano, I am reading the quoted sentence as being a real blocker to the early opening of the pipeline.

"Ankara wants to negotiate a settlement with Iraq before the pipeline is reopened and appears willing to forgo transit revenues until it does."

My interpretation is:-

a) they have no intention of opening it until the settlement is reached.

b) they have rejected the alternative of opening it while discussions take place, thus forgoing the transit revenues that would accrue between now and the settlement being reached.

You missed the question mark off what was posted on ADVFN.

As in “ Production to restart 18th July?”

Since it somewhat changes the meaning, which I am sure was accidental, might be an idea to contact Admin and ask them to take the thread down :)

The alleged visit of Ergdogan to Iraq on dd/mm/yy, still waiting for values for the three unknowns from Turkey.

Given the offset value of the award was $1.471 billion, what was the interest rate penalty for late payment and what is the current award with that included?

What % if any of the award was covered by an indemnity from the KRG? If non-zero what are the arrangements for paying it?

Given the announced shifting of large volumes of oil wrt destination refineries within Iraq, what volume is actually KRG oil that would have been exported down the pipeline, what volume from which fields and at what realised price?

ValueS has started the process of questioning the taking out of a loan with why now and how much extra cash and timeframe.

My contribution would be…

In the context of savers having access to 6% being available in the UK fixed for 2 years:-

Who would offer the loan? Usual Nordic sources?

On what basis, secured or unsecured?

How big a loan?

At what coupon?

Over what time frame?

At what level would they want to set the default level for the cash in bank during the term of the loan?

"LOL. Who would lend money to a company that isn't producing any revenue and has negative free cash flow?" 

Well they managed to borrow 550m before.....”

Well that didn’t go well for the LTH in 2016 when the ensuing restructuring happened.

On the other hand, those long term bond holders who participated did very nicely since, with their debt gradually getting “repaid” through the CRP, CO and dividends.

Those who did even better bought the debt at 50c on the Dollar prior to reconstruction and participated in it.

Another group who are doing at least OK are the shareholders who bought just after the reconstruction or just after the COVID drop or at any price where the dividends have either reduced their original capital at risk to zero or to a level below that linked to the current share price.

The biggest sufferers were the LTH who either couldn’t participate in the skewed restructuring offer or chose not to. ( By skewed I mean they could not access brokers who would let them buy many multiples of the base number allowed by the T&Cs of the offer.)

Hopefully by now everyone has grasped the concept that the 1 for 100 consolidation, that followed the restructuring, did nothing to the value of their shareholding. (1/100 the number of shares but each new one was worth x100 the old ones.)

I never post on any share board where I am not holding a position.

If I am Short, as part of my strategy to try and make money, then II will always declare it

Summary of what I have managed to glean from various sources, some very biased in polar opposite directions and some poorly translated.

KRG debts to oil companies, both producers and traders, must be paid off within five years - no differentiation I could find as to which group would be paid off faster and no mention of interest.

Iraq has been doing very nicely with the pipeline being shut, the price they get for their oil is raised owing to lower regional production and the KRG non-export volume fits in with the lowered OPEC+ production requirements for Iraq as a whole.

Turkey wants the adjudication award reducing but since that was decided by the court they should be talking to them. Maybe they want a “ let’s make it look like we paid in full but really we didn’t” outcome by working with Iraq.

Turkey also wants the outcome of the next arbitration award taken care of now before it is known. The first award was for when volume through the pipeline was lower than that for 2019 onwards as covered by the next one.

If the pipeline is open then the KRG must export a minimum volume through it but if it’s not then Iraq can decide how much volume it wants of what quality for specific refineries in Iraq.

(Seems a bit one sided to me but do they have the spare capacity and capability to transport the full minimum volume wrt to widely different qualities from different fields in different locations to different refineries?)

The equitable “cost of production” reference has raised a few eyebrows in certain quarters - only worth reading those comments if you fully understand how PSCs and TSCs work. (This is getting very little attention on the BBs, where the main focus is getting the pipeline open or moving oil to refineries within Iraq.)

This seems the best summary of what went on and what still needs sorting IMO.

https://shafaq.com/en/Iraq-News/Parliament-votes-on-parts-of-budget-bill-postpones-remaining-provisions

@Mulder, some bits have but not in full.

Some people seem to be confusing the meaning of “passage” which is the ONGOING process of going through the Articles one by one, with “passed” which is the process having been completed.

Voting on Budget postponed yet again to even later tonight.

One problem that SEEMS to have arisen is a clause linking the “cost of production” of oil by the KRG to that of the average of the rest of Iraq.

If it means what is generally understood by production costs in both TSCs and PSCs then it’s no big deal.

If it means the cost of running the contracts to produce the oil then the PSCs are much more expensive than the TSCs and that seems to imply that the KRG would have to foot the difference.

Then again it could mean something completely different because there is no such clause, or it’s been misquoted or the original is fine but it has been translated by someone who shouldn’t be doing it.

The purchaser of the Genel shares was a company, Bilgin Grup Doğalgaz A.Ş.

The last two upper case letters signify it is a limited company - I’m not sure exactly which type under Turkish rules.

I think the person named is there because they happen to hold positions in both companies.

Whilst any reference to their knowledge of potential events still holds true, does it make any difference that these buys are technically not the actions of an individual?

@Machersman, the current effective share price for the LTH since then has changed, from £181.50 down to just above £1.40 - the market view has obviously changed even if the understanding of the field might not have in the minds of others.

If we make the assumption that the writers of all the independent reports were acting in good faith at that time, as were those drawing conclusions from them; then IMO what matters is what those same people would write now given all the subsequent data and improvements in understanding fields.

Since 2012 there have been various studies, the Abstract from one reads, “ In the Shakan oilfield, the productivities of the carbonate reservoirs are very different in different intervals and different wells, making petroleum geologists very confused.”

@Invstrat, I did include the following when posting my original suggestion without the involvement of the USA.

“Creative solution in 60 seconds as opposed to 60 days but it does involve a certain level of trust :)”

Maybe I should have repeated it in the update.

On a more serious note, where were Iraq/Kurdistan on the worldwide “transparency” ratings when you first invested and did you think it mattered at the time?

When I initially got involved they were below 200th and last time I looked they still were - to me it was a known known.

Nearly every one of your posts includes a reference to their behaviour but do you think it is the root cause of your investment not delivering what you had hoped for?

If the USA are really interested then they could start the seeding…

They lend Iraq the $1.461 billion, who then give it to Turkey, who then use it to pay off the award by sending it to Iraq. If the KRG have indemnified the Turks from paying any part of the award then that portion is withheld before the rest of the lump sum is returned to the Americans.

The Iraqis then get free use of the pipeline in lieu of the award and the Iraqis withhold any of the indemnified sum from the KRG and pay it back to the Americans over a number of years.

Having bought time, actually get together NOW and work out a plan to deal with the next award for the years not covered so far - they all knew this last was one was coming according to that Iraq Oil Report piece that BB posted last July.

When it comes to arbitration awards, the conditions for payment are usually set by the court at the time of the award, so why are the two countries in negotiations after the award has been issued?

We now know that Turkey is in a very difficult position financially, particularly wrt foreign currency.

What chance is there that they could pay the $1.471 billion award in one payment even if they wanted to?

Any long term solution e.g. giving Iraq free use of the pipeline in lieu of the award could well be unworkable if it was not catered for in the award - no mention of the court now being involved in changing anything.

Creative solution in 60 seconds as opposed to 60 days but it does involve a certain level of trust :)

Iraq seeds the solution by forwarding $1.471 billion to Turkey. Turkey returns it as payment of the award and informs the court that the conditions of the award have been met. Turkey THEN gives Iraq the free use of the pipeline up to the value of the award.

Then the short, medium and long term costs would start to become more discernible.

Auto correct obviously has gallows orientated sense of humour - share voting rights was intended as opposed to its last rites interpretation.