Member Info for theoryman

They should be paying the IOCs for Oct 2022’s production from the money they got for selling that month’s production!

If the late payments are actually going to come from future revenue from future production under a new agreement with SOMO then things are far worse than many will have allowed for IMO.

6. Talk that hard liners in Bagdad with Iranian influence had gone back on the deal, and not given instruction to start crude.

The more they delve they find the KRG have more and more debts. Once the O&G Law is signed, who is responsible for paying off those debts which arose BEFOREHAND?

How long will it take for any costs picked up by the CGI to be balanced out by increased nett revenue under an O&G Law?

Can this be used by the hard liners to wreck the hard won consensus?

?7. Turkey unhappy with losing the case doesn't want to pay, nearly a billion fine.

IF the initial reports that they were indemnified against such losses by the KRG are true, then they owe nothing. The KRG have to find the money, which links back to 6 above.

?8.Turkey trying to blackmail crude restarting by linking it to other long standing court cases.

One man’s blackmail is another man’s seeking clarity. If there was an indemnity clause then how will it be sorted after the next arbitration award, maybe they would like to see how it works this time.

?9.Turkey asking for talks...but have they happened and what was the result. Bit poor if ignored.

Given the questions raised under 6, 7 and 8, no wonder Turkey would want talks and the CGI would want to avoid them while they get things nailed down.

I’m all for a touch of reality but next time could you put a more positive spin on the title?

Something like “A slight hope” or”A glimmer of hope”.

There’s something about the compound effect of glimmer and slight that depressed me a bit :)

https://www.bloomberg.com/news/articles/2023-04-24/oil-tankers-tired-of-waiting-on-iraqi-kurdish-crude-depart-empty-after-a-month

“Oil Tankers Tired of Waiting on Iraqi Kurdish Crude Depart Empty After a Month

* Five vessels had been waiting off Turkish port of Ceyhan
* Two tankers departed over weekend without loading crude
ByAnthony Di Paolal
24 April 2023 at 09:51 BST

Tankers waiting nearly a month to load crude from Iraq’s Kurdish region have departed waters near the pipeline terminal in Turkey, an indication that oil won’t soon flow from the area amid a standoff between the governments involved.
The vessels Neverland and Amax Anthem left the waters near Ceyhan in Turkey over the weekend without loading any crude, according to Bloomberg ship-tracking and port agent reports. Three tankers chartered to take Kurdish crude are still waiting near the port. The five vessels were hired to carry a total of about 4 million barrels of oil…”

Rest is historical background.

Retired Theoretical Physicist, with zero experience of large scale fluid dynamics in real life, about to ask what might appear to you Engineers as being daft questions but was always willing to oblige even when I was working - sometimes, just sometimes…

When the pipeline was shut down would it be full or as empty as possible?

When doing maintenance how do you isolate the bit you are working on?

How do you test the work done and hopefully avoid one of those “Ooops” moments?

When restarting the flow where do you input from first, furthest from Ceyhan or nearest?

Given that Ceyhan is at sea level, the last bit from the previous high point is downhill, how do you control the momentum of the oil in that last bit during a restart?

Does the API of the oil entering during start up matter? ( I can picture some already flowing high API low viscosity stuff crunching into the rear end of the Shaikan production before it all gets mixed up - told you I had no idea of what really happens :) )

Thanks BB, IMO anyone who thinks there is a punchy answer has completely failed to comprehend the underlying complexity of the internal battles ( Political Economic Social & Technological) taking place within Iraq. Finding a solution that initially satisfies enough people to get through will be difficult enough, even more so one that can survive repeated attacks by disgruntled minorities over time.

I think my worst case scenario is more worser than yours :)

While we wait for the original poster on each thread, one with … and the other …., to respond to my questions - seemed a fair request to me - here are my thoughts. Also seems fair that I should answer questions I ask of others :)

1 PSCs rewritten, all numerical values unaltered, only changes are CGI replaces KRG and SOMO replaces MNR.

2 As above but numerical values are altered to reduce the Profit Oil stream to bring it closer to, but still ABOVE, that of a typical TSC in the rest of Iraq at current PoO.

3 Any attempt to keep any sort of PSC is thwarted by the FSC ruling they are illegal and this time INSTRUCTING the ICG to dismantle them. Case referred to ICC in Paris who agree with the FSC and we get imposed TSCs. No compensation because both the IOCs and KRG were found to have been knowingly acting in a potential illegal manner at the time of signings, they should have sought clarity from international courts/arbitration BEFORE signing.

4 Initially as above but a very different outcome. The ICC rule in favour of the mutually agreed changes to the contracts and against the FSC but the time taken would probably be very damaging.

5 As in 2 above but the Profit Oil stream is brought in line with the MEAN equivalent TSC for comparable fields in Iraq. An alternative would be a hybrid X% of production under present terms of PSC and (100-X)% under a TSC.

Same set of questions to both of you…

Referring only to clauses contained within the PSC and NOT agreements external to it:-

?1 What is the absolute best outcome you have allowed for?
?2 What is the next best below that which will still do very nicely thank you??
3 What is the absolute worst outcome you have allowed for?
?4 What is the one that isn’t the worst but would still be very damaging?
?5 Given 1,2,3 and 4 above, what compromise solution do you think will be the most likely?

Same set of questions to both of you…

Referring only to clauses contained within the PSC and NOT agreements external to it:-

?1 What is the absolute best outcome you have allowed for?
?2 What is the next best below that which will still do very nicely thank you??
3 What is the absolute worst outcome you have allowed for?
?4 What is the one that isn’t the worst but would still be very damaging?
?5 Given 1,2,3 and 4 above, what compromise solution do you think will be the most likely?

Hopefully people have realised by now that taking a one sided view of how things will turn out wrt GKP is probably not the optimal strategy :)

So SOLELY in terms of what will happen to the PSCs when the O&G Law goes through.

1 What is the absolute best outcome you have allowed for?
2 What is the next best below that which will still do very nicely thank you?
3 What is the absolute worst outcome you have allowed for?
4 What is the one that isn’t the worst but would still be very damaging?
5 Given 1,2,3 and 4 above, what compromise solution do you think will be the most likely?

Added the bits in brackets and separated out the key points.

“ The meeting will focus on preparations for the resumption of exports, (OK)
the terms and conditions of crude oil sales through SOMO, (OK)
the proposed mechanism for repaying debts of international oil companies (OK)
and their share in future oil export sales, (which are governed by CONTRACTS which cannot be changed unilaterally) the sources said.”

IMO the IOCs shouldn’t necessarily send just the top guns, instead include the best poker players as well.

CCC, thanks for that.

It looks like the interest only starts accruing from the date of the awardS and therein lies a potential problem, arranging the HOW the two awards are settled.

Using the difference between is the simplest way forward but there are really two awards and technically they might have to dealt with separately.

The difference being in the first case there is only one side that can be taken to court under the enforcement rules but in the latter there are two. If the two awards are settled on different days then there will be different amounts of interest accrued based on not just capital but time also.

Has anyone managed to track down the actual wording of the arbitration decision reached by the ICC, can’t find it on their own website but having to use a very slow connection.

On the surface it looks there are two awards that nett off at $1.4 billion in favour of Iraq, one for circa $1.9 billion against Turkey and the other $0.5 billion against Iraq.

Looks like Iraq have gone to court for the nett amount and Turkey is having a think about muddying the water by trying to get it looked at as two awards.

Given the time delay between them both being naughty and the awards being made, is there interest that needs to be paid? If so at what rate, internationally agreed or country specific?

That last bit would be fun, each award increased by a country specific rate and then netted off?!

“ WHEN will these be paid ?”

Best case they start tomorrow, worst case the 12th of Never :)

“ “He [Iraqi Prime Minister Mohammed Shia’ al-Sudani] said that they are trying to complete the administrative and technical procedures so that the oil can flow in the next one or two days,” deputy speaker of the Iraqi parliament Shakhawan Abdullah told Rudaw.“

Was circulating elsewhere much earlier today, it’s the Deputy Speaker being quoted about what the Prime Minister said.

Apart from the obvious big gaps up or down, it still surprises me how slowly the price changes within what end up as large bodied blue or red candles .

Everyone strives to make well informed decisions, problem with this area of the world is how well informed are the people giving out the information - add in mistranslations of sound bites targeting a specific home audience and maybe I shouldn’t be surprised :)

How things have changed on this board :)

A post containing, “ Got to bear in mind oil contracts in Iraqi known fields are like service contracts where the oil companies get just a few dollars per barrel extracted. these where hotly contested and bid on, and I know investors here took all the exploration risk, however we have yet no guarantees that existing contracts with the KRG will be grandfathered. First thing they will say is "we are getting more for our crude so need to tweak this or that", while waving that contract sword over our heads. So we must continue to be very wary.” gets FIVE recs!

Previously even including a fraction of that would have led to the poster being labelled as a “snake”, shorter, paid deramper…

Various named people, holding positions down the food chain, who claim to be in the know, stating that all underlying problems with pipeline etc are almost sorted or now completely sorted - just awaiting formal announcement…

Shaikan Realised Price under KRG was (Brent-various discounts-transport) or roughly (Brent-23).

Shaikan Realised Price under KRG is now (KBT-16) or (KBT-17) according to mine and PUTUP’s calcs.

Shaikan Realised Price under SOMO will be (KBT-X) where the effect on the price of KBT and X are both unknown at the moment.

Just for a laugh, how about under SOMO the realised price of KBT rises and X drops giving a nett result for the realised Shaikan Price which is HIGHER than (Brent-23)?

@BB, sometimes Occam’s Razor is the correct approach :)

The value you derived from the official figures and my expected value coincide because they actually happen to be the same?!

Take you point though about running reasonable alternatives and seeing what figure they produce.

Also I am aware of the Sulphur effect and the TAN one and… on deciding the total discount.

For anyone who wonders if there has been an attempt to compare what price is achieved at market compared to one derived from a statistical model then here is a golden oldie.

https://www.esmap.org/sites/default/files/esmap-files/08105.Technical%20Paper_Crude%20Oil%20Price%20Differentials%20and%20Differences%20in%20Oil%20Qualities%20A%20Statistical%20Analysis.pdf

Two points about it, there is no reason why that model should work now and guess where Shaikan’s characteristics lie compared to all those oils included in the model.

So on reflection maybe it’s simply that Shaikan is the outlier compared to the rest of the contributors to KBT in terms of API, Sulphur etc. and the $16 is reasonable.

Edit @WWP, the discount of $16 was to the REALISED price of KBT, that figure is already adjusted down for discounts other than quality and transport, so whoever sells it should be irrelevant - that is to how the $16 figure has arisen.

Rest is OK.

@WWP, the discount of $16 was to the REALISED price of KBT, that figure is already adjusted down for discounts other than quality and transport, so whoever sells it should be irrelevant.

If SOMO sells it at a higher realised price than the KRG then the realised price for Shaikan would go up but there would still be a $16 gap.

My question is why is the quality discount and transport discount so high?