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July 30, 2013 9:07 pm
Genel Energy, the oil explorer run by former BP chief Tony Hayward, is set to significantly increase its estimate for the amount of gas it has found in Iraqi Kurdistan, highlighting the region’s potential as a major gas producer.
Genel will say that the Miran and Bina Bawi gasfields hold between 8 and 18 trillion cubic feet of gas, a person close to the company said – at least twice previous estimates of the fields’ gross gas resource.
The new assessment, which will be unveiled when Genel announces its interim results on Wednesday, is based on readouts from appraisal wells drilled recently at Bina Bawi that were “spectacularly successful”, the person said.
The estimate comes amid continuing progress between the Kurdistan regional government and Turkey on a landmark gas agreement, long held up by differences over pricing.
The deal, which could be signed by the end of the year, would see Kurdistan exporting 10bn cubic metres of gas a year to Turkey – about 20-25 per cent of the country’s annual gas consumption. So far, there is no infrastructure for delivering the gas, though analysts think an export pipeline could be built within a year and the necessary gas processing facilities within 30 months.
The gas deal is part of a wide-ranging energy partnership being forged between Ankara and Iraqi Kurdistan that will vastly increase Turkey’s influence in the energy-rich north of Iraq and boost its own energy security.
It will see Turkish state energy companies take stakes in Kurdistan’s oil and gasfields, and foresees the construction of an “energy corridor” that would establish Kurdistan as a major supplier of both oil and gas to Turkey’s energy-hungry economy.
The rapprochement between Turkey and the KRG comes amid continuing stalemate between Kurdistan and the Iraqi federal authorities over control of the northern region’s hydrocarbon resources. Baghdad has denounced the contracts Kurdistan has struck with companies like Genel as unconstitutional.
The KRG has suspended shipments of oil through the centrally controlled Iraqi export pipeline because of a payments dispute with Baghdad, and is trucking small quantities of crude across the Turkish border by tanker instead.
Longer-term, the KRG wants to pump its oil directly to Turkey, bypassing the federal export infrastructure. A pipeline it is building to the Turkish border will soon be completed, with analysts expecting first oil to flow by the end of the year.
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