TAQA Enters into EPC Contract with KAR for Atrush Block Pipeline

Source: www.gulfoilandgas.com 11/8/2016, Location: Middle East

ShaMaran Petroleum Corp. announces that TAQA Atrush B.V., as operator of the Atrush Block Production Sharing Contract ("PSC"), has entered into an Engineering, Procurement and Construction ("EPC") contract with KAR Company ("KAR") for the construction of the feeder pipeline from the Atrush block boundary to the tie-in point with the main Kurdistan export pipeline (the "Feeder Pipeline"). Work on the Feeder Pipeline will commence immediately.

Simultaneously the Assignment, Novation and Fourth Amendment Agreement to the PSC (the "4th PSC Amendment") and Atrush Facilitation Agreement were concluded between TAQA, General Exploration Partners, Inc. ("GEP", a wholly owned subsidiary of ShaMaran), Marathon Oil KDV BV (together, the "Non-Government Contractors") and the Kurdistan Regional Government ("KRG").

The 4th PSC Amendment and Atrush Facilitation Agreement include the following principal terms:

- The KRG acquires a 25% interest in the PSC effective November 7, 2012, the date of declaration of commerciality ("DOC date"). As a consequence the respective participating interests in the Atrush PSC are TAQA at 39.9%, the KRG at 25%, GEP at 20.1% and Marathon Oil KDV B.V. at 15%;

-The Non-Government Contractors will fund the cost of constructing the Feeder Pipeline which will be novated to the KRG following the commencement of oil exports from Atrush;

- All Atrush petroleum costs from the DOC date through the commencement of oil exports from Atrush will be paid by the Non-Government Contractors and the majority of the KRG's share of these costs will be repaid through an accelerated PSC cost recovery arrangement from the sale of future oil production from Atrush; and

- Feeder Pipeline costs and the balance of the Atrush petroleum costs incurred by the Non-Government Contractors on behalf of the KRG that are not covered by the accelerated PSC cost recovery arrangement will be repaid by the KRG within 2 years from the commencement of oil exports from Atrush.

The length and complexity of the commercial discussions associated with the above discussed agreements have brought the commencement of the Atrush Feeder Pipeline closer to the winter season which means there is an increased risk to the schedule and, while completion in the first quarter of 2017 is still the target and a possibility, it is probable that first production from Atrush will be further delayed to the second quarter of 2017. As a result the Company estimates that it will require approximately $20 million of additional funding which the Company expects will be made available by increasing GEP's Super Senior Bond through facilities provided for in GEP's April 2016 financing arrangement.

Chris Bruijnzeels, President and CEO of ShaMaran, commented: "We are very pleased construction on the Atrush feeder pipeline will now start under the direct operational control of TAQA. The pipeline funding arrangement with the KRG allows us to move forward in executing the construction project. We are also pleased that the KRG has finalised their right to acquire a 25% interest in Atrush. With this, two major uncertainties surrounding the Atrush project have been positively resolved. The partnership can now fully concentrate on delivering first oil. The accelerated cost recovery scheme combined with the pipeline funding repayment should allow for a robust cash flow once production has started."

This information in this release is subject to the disclosure requirements of ShaMaran Petroleum Corp. under the EU Market Abuse Regulation and/or the Swedish Securities Markets Act. This information was publicly communicated on November 8, 2016 at 12:30 Central European Time.

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Related Categories: Civil Works  Civil Works - Finishing works  Construction Contractors  Electrical Works  Engineering Procurement and Construction (EPC)  Engineering Procurement and Construction Management (EPCM)  General  Mechanical Works  Pipe Lines Installations  Steel Works 

Related Articles: Civil Works  Civil Works - Finishing works  Construction Contractors  Electrical Works  Engineering Procurement and Construction (EPC)  Engineering Procurement and Construction Management (EPCM)  General  Mechanical Works  Pipe Lines Installations  Steel Works 

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