Genel Sees Pipeline Exports From Kurdistan Next Year

Source: Reuters 2/28/2013, Location: Middle East

Genel Energy expects to export oil by pipeline from its fields in Iraqi Kurdistan by 2014, regardless of a political impasse between Baghdad and the semi-autonomous region.

It primarily sells its oil in Kurdistan's domestic market, and also trucks small volumes for sale in Turkey, but wants pipeline exports to restart, to open up a bigger market for its oil and gas and help boost revenues.

The crude used to be shipped to world markets through a Baghdad-controlled pipeline to Turkey, but exports via that channel dried up in 2012 as a result of a row over payments. Iraq views any continuing Kurdistan exports as illegal.

"We can expect by 2014 to be accessing the export markets from our major assets, whether that is through Baghdad-controlled infrastructure or through independent Kurdistan-infrastructure," Chief Financial Officer Julian Metherell said in an interview.

Genel posted full-year revenues of $333.4 million, in line with its forecasts, on production, which averaged 44,500 barrels per day (bpd) in 2012, and said it will start exploring for oil deeper in Kurdistan and in Morocco later 2013.

Production this year will come in at between 45,000 bpd and 55,000 bpd, the company said, adding that revenues will be in the region of $300 million to $400 million depending on the level of export sales.

Sales from oil exports should fetch a higher price than those sold in the domestic Kurdistan market. Some payments from exports when they did take place for a period last year,2012, are still owed to Genel, Metherell confirmed.

The long-running row between Iraq's central government and the Kurdistan region over how to exploit the world's fourth largest oil reserves and divide the revenues means that Kurdistan says it is still waiting for payments from Baghdad.

Meetings between Iraq's oil minister and his Kurdish counterpart in Baghdad failed to resolve the impasse.

But Metherell, a former high-profile Goldman Sachs banker, was optimistic that Genel would be exporting in 2014, when he said the company's production potential will have risen to 140,000 bopd.

"Most critically, the infrastructure is under construction which has the potential to remove the prevailing reliance on Baghdad-controlled infrastructure," he said, referring to pipelines being built by the Kurdistan Regional Government to connect Genel's Taq Taq field to Turkey.

Shares in Genel traded down 3 percent at 737.75 pence in morning trading.

"The numbers were perfectly reasonable. The asset base is really good, but it's all about the politics and getting paid, and that's really going to dominate the performance of these shares in the short to medium term," said an analyst who declined to be named.

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