Member Info for ValueS

I don't think they were maxed out. They had to cut southern production back in October22 when OPEC+ decided to cut production by 2m bopd and every OPEC producer had to comply with a lower quota. The IFG can now simply re-adjust to take into account the pipeline outage. Even if they can't fully compensate, the upcoming 211 kbopd quota reduction from 1st of May could simply be (largely) ignored if the outage continues. IMO Turkey can't play tough here as they would also lose badly needed revenue and not just Kurdistan's oil.

I think they are just desperate to get it operational again regardless of the specs. They have finished both Salahuddin1 and Salahuddin 2 plants (70 kbopd each). They also working to get the North plant with 150 kbopd operational and two lube plants with 5 kbopd each.

Sorry BB, I seem to have missed the Baiji refinery link (slap, slap naughty boy), but here it is::
http://www.xinhuanet.com/english/2021-01/11/c_139659155.htm

It is worth noting that Iraq has finally inaugurated the 140 kbopd Karbala oil refinery with modern technology:
https://www.enerdata.net/publications/daily-energy-news/iraq-inaugurates-140-kbd-karbala-oil-refinery.html
Iraq has also successfully doubled the run rate of the Baiji refinery during 2022 to 140 kbopd (from 70kbopd in 2021).

Also, worth noting that Kuwait's 615 kbopd Al-Zour refinery is nearing completion:
https://www.argusmedia.com/en/news/2426722-kuwait-brings-second-phase-of-alzour-refinery-online
This refinery is specifically designed to handle heavy crude .

In addition, the recently opened Saudi Arabia's Jazan Refinery has reached full capacity::
https://www.mees.com/2023/3/17/refining-petrochemicals/aramco-ceo-jazan-refinery-throughputs-hit-400000-bd-capacity/3cd7df60-c4cb-11ed-84d6-09d9565b4125

So, in just 2 years, there has been an increase in refining capacity of sour heavy/medium crude in the Gulf region of 1.225 mbopd. Which undoubtedly would affect the supply of sour heavy crude to the market; and hence price.

Best Regards ValueS

"Ibrahim Kalin, Turkish presidential spokesperson, told the country’s state media on Wednesday that “the PKK has a very serious establishment in Sulaimani” and Ankara will not disregard this."

https://www.rudaw.net/english/kurdistan/08042023

Thanks 111notout, sorry Paul.

That is just for the Hasira oil field which is run by a Russian company and has no connecting pipeline. The oil has to be trucked from there.

2014 I think is the year when Maliki (the PM then) decided to stop budget payment to Kurdistan as the KRG continued to sell the oil independently of Baghdad. It is also the year when the big ISIS invasion occurred , and a third of Iraq's territory was captured. That caused a massive liquidity problem for the KRG which forced them to pre-sell the oil to trade housed such as Glencore, Vitol and Gasprom.
When PM Sudani said that the IOCs exploited the KRG in 2014, the first thing jumped to my mind was the trade houses oil deals with prepayment and not the operators of the Kurdish oil fields! I think Sudani is a pro-Kurdish PM, or at least not hostile to them. Besides, he heavily relies on their support in parliament to stay in his post. The fact that the ICC arbitration court ruling came out during his premiership isn't his fault, it is just a coincidence.
For GKP, there is also the additional layer of protection that it actually DISCOVERED the Shaikan oil field AFTER Kurdistan became a semi-autonomous region. There is a special legal treatment for this case.

Best Regards ValueS

Forgot to add that yesterday the 140 kbopd Karbala Refinery mentioned in oilprice.com was declared open By Iraq's PM. It is capable of handling Sulphur rich medium/heavy oils

https://youtu.be/iYA6XFlXF1k

"The banking collapses that have sapped confidence in oil markets and brought oil prices closer to the $70 per barrel mark have been followed with great interest across the Middle East. For the first time in many months, flat prices were close to fiscal breakeven level as countries like Bahrain, Algeria or even Oman are now asking themselves if balancing the budget is a manageable task."

https://oilprice.com/Energy/Oil-Prices/Will-Banking-Fears-Force-Middle-East-Producers-To-Cut-Prices.html
__________________
Good prediction by oilprice.com just 6 days ago.

Best Regards ValueS

"what is the best case scenario here?"

To me, the best case scenario is:
1- SOMO to respect the sanctity of the PSC(s) especially regarding payment on time and only change any references of MNR/KRG to SOMO/ICG as the other side of the contract(s). The PSC(s) clearly state that payment of a month's production must be made no later than the 15th of the following month provided the contractor issues the invoice within the first few days (I think 3 days) and an up to date R-factor calculation.

2- Put a clear plan for a quick payment of the past 6 months invoices that the MNR failed to pay.

3- Pricing is Brent based (not KBT), hopefully with lesser discount :)

Well, I can dream can't I! :D

Best Regards ValueS

"Iraq's autonomous Kurdistan region is to resume oil exports though Turkey Monday but in the future they will be supervised by the federal government in Baghdad, officials from both sides said.

The outcome, thrashed out in talks between federal and regional officials, spells the end of independent oil exports by the Kurdish regional government and marks a clear limit to its autonomy.

Ankara had stopped handling Iraqi Kurdish oil last month after an international tribunal ruled in a nine-year-old dispute that Baghdad was right to insist on overseeing all Iraqi oil exports.

"Sales of Kurdistan crude will be managed from now on by the State Oil Marketing Organization," a federal government official told AFP on Saturday.

A "joint committee" formed by the federal and regional governments will supervise the export process, the official added."
______________________
Just like expected, lets hope they'll do what they said they'll do. Turkey should also cooperate.

Best Regards ValueS

Iraq would like to send even more than 35MTA through its own pipeline to Ceyhan. Unfortunately, the Iraqi portion of the pipeline got blown up many times by terrorists (who were supported by Erdogan) even before Daesh. A bit like the way Nord Stream pipelines got blown up by a mysterious terrorist! While at the same time the Kurdish portion was built (with the blessing of Erdogan). Does that not count as Force Majeure condition?

Not only this saga is prolonging KRG financial pain, but IMO it also unintentionally benefiting the Federal Government. Because of the inevitable rise in oil price. This rise not only compensates the federal government for the loss of the revenue from the 75 kbopd exports to Ceyhan from the Kirkuk oil field, but also some extra cash on top. Iraq exports ~ 3.3 mbopd from the Sothern ports. In addition, the Federal Government can increase oil production in its southern fields without violating the OPEC+ quota; such increase can be justified by the cut of production in Kurdistan and Kirkuk. There is absolutely no gain for the KRG by being stubborn here while the federal government could stay firm for as long as it takes (as long as there are no internal/external pressures.) All IMO.

Best Regards ValueS

About $4.5 m if BOD continues as normal as if nothing's happened. Could be as low as 10% of that if they stop everything, sack everyone and just maintain a skeleton structure.

Not really surprised by the tone of the report. Shafaq news is funded by Turkey.

To me, the future prospect of GKP is more important. I think it is likely to manifest in the form of a Technical Sharing Contract (TSC as opposed to PSC) between (GKP and partner MOL) with SOMO whereby the contractor (GKP+MOL) gets paid a fixed amount of $/bbl regardless of POO + a mechanism for cost recovery.
If that is the case, then for the Oct2022 - MAR2023 production, the question of who will pay is of paramount importance and not just when and how much.

Best Regards ValueS

"With this risk gone and FDP agreed and steaming ahead then what will GKP be worth?"

My heart (angel) tells me: over £10
My head (devil) tells me: hh.. just over £4 if you're lucky

The rise will be even bigger whence exports are resumed! I've held through much worse situations before: ISIS invasion, restructuring , covid19 ...
Moreover, if the weekend ruling proves to be a catalyst for resolving the KRG/ICG problems regarding Kurdistan oil exports through Turkey once and for all, then the huge political risk that has been hanging over all the IOCs operating in Kurdistan for over a decade will be gone! Forever! And I could easily see GKP at £4 or more!

Best Regards ValueS

The KRG now has no choice but to handover the oil to SOMO as the Iraqi Federal Government been demanding for years. SOMO can sell the oil at much better price than the KRG can manage. It will be interesting to see how the IOCs will fare under such an arrangement. We know the KRG made a mockery of the PSCs they signed with them. The IOCs (including GKP) are still needed by both parties to operate to get the juice out of the ground for the benefit of all involved. So, here is hoping for a better outcome to all at long last, or is that being too optimistic? I wonder.

Best Regards ValueS