Genel Operations in Iraq

=History=

Before the merger with Vallares in 2011, Genel Energy was a private Turkish company under the control of Mehmed Sepil. In 2002, while working as a contractor in Kurdistan Sepil was approached by Jalal Talabani, Kurdish politician and later president of Iraq, about developing the Taq Taq oil field. Sepil began drilling at Taq Taq and also took stakes in other Kurdish fields. The Production Sharing Contract (PSC) for exploitation of the PSC was reinstated and signed by the KRG and Genel Energy International Limited in 2004.

The merger and expansion followed and by 2012 Genel came to be the leading oil producer in Kurdistan, producing 40,000 barrels per day barrels per day (bpd) in 2012.

Following the resumption of export sales from the Kurdistan Region in the first week of August, total exports commenced at 100,000 bopd. As part of a subsequent agreement reached between the Kurdistan Regional Government (KRG) and the Federal Government of Iraq (FGI) on the 13 September, this number is expected to rise to 200,000 bopd by the end of the year.

Genel Energy is now selling 100% of the Company's production at international prices and our production guidance for 2012 has increased to 45,000 bopd. In 2013, assuming the Company continues to export our production from both Taq Taq and Tawke, average daily production is expected to be in excess of 70,000 bpd. According to the company's Annual Report, the company saw a compound annual growth rate (CAGR) of 83 percent in Kurdistan between 2009-11. (ref)

The company was also expected to bring on stream 4 billion cubic metres per year of gas from its Kurdistan fields by 2015. However exporting the oil produced has caused problems because of sporadic disputes between the Kurds and Baghdad over pipelines. After being halted for several months, exports were started up again in August 2012, with 200,000 bpd pumped by Genel. The company hoped to raise this level to a total of 200,000 bpd by the end of 2013, assuming continued production from the Taq Taq and Tawke fields.

According to Tony Buckingham, founder of Heritage Oil, because Genel are so heavily identified with the KRG's energy policy as it is, when it makes deals with the KRG, it does not constitute such a "slap in the face" to Baghdad as those signed by Chevron and ExxonMobil, for example.

=Activities and Contracts=

Taq Taq and Tawke (Kurdistan)
Genel has stakes in two producing oil fields in Kurdistan: Taq Taq and Tawke. As of 2012 these fields had estimated proven and probable (2P) reserves of 1.4 billion barrels (bbl) of oil and probable and possible reserves of 1.9 billion barrels of oil equivalent. The company is targeting to achieve total oil output of 140,000 barrels per day (bpd) from both fields by 2014.

The company holds a 44 percent working interest in the Taq Taq field, which was producing 90,000 barrels per day (bpd) as of November 2012. . In 2010 a 60,000 bpd central processing facility began operating at Taq Taq. (AR)

It also has a 25 percent working interest in the Tawke licence areas, having acquired the license in March 2009. As of November 2012 the field was producing 75,000 bpd). In 2012 Genel announced an upgrade of Tawke's reserves and resources by 78 percent, to total....

Ber Bahr, Dohuk, Miran and Chi Surkh (Kurdistan)
Genel's exploration interests lie in the Ber Bahr, Dohuk, Miran and Chia Surkh license areas, all acquired over the course of 2009. In August 2012 Genel announced a series of acquisition deals amounting to around $860 million with the aim of strengthening its position in Kurdistan. The companyl made a deal with British Heritage Oil to increase its stake in the Miran block to 51%. and analysts at Deutsche Bank suggested that the deal would eventually lead to it buying the remainder of Heritage's interests in Miran. In the same month Genel also acquired an additional 21 percent stake in the Bina Bawi block in the centre of the region from Hawier Energy.

The oil produced by Genel that cannot be exported goes to Kurdish refineries for a price of about $60 per barrel, well below that achieved on world markets. However according to the New York Times as of 2012 Genel was still generating most of the cash needed to pay for its $200-$250-million-a-year exploration and development program in Kurdistan. It was also reported to be sitting on about $1 billion for acquisitions.

=References=