x Abu Dhabi, UAEMonday 24 July 2017

Genel in Kurdish oil link to Turkey

Genel Energy, the biggest oil producer in Kurdistan, plans to fund a pipeline from the autonomous region in Iraq to Turkey.

Turkey is keen to establish closer ties with Kurdistan in an effort to ensure its energy supplies. Above, the Kar refinery in Erbil. Sebastian Meyer / Corbis
Turkey is keen to establish closer ties with Kurdistan in an effort to ensure its energy supplies. Above, the Kar refinery in Erbil. Sebastian Meyer / Corbis

ERBIL // Genel Energy, the biggest oil producer in Kurdistan, plans to fund a pipeline from the autonomous region in Iraq to Turkey.

Tony Hayward, the company's chief executive, expects work on a 1 million barrel per day (bpd) pipeline from Kurdish oilfields to the Turkish border to begin in the first half of next year, even as relations between Ankara and Baghdad have soured.

"We are intent on investing and funding that development," he said at an energy conference held in Erbil this week.

Genel will complete a pipeline connecting its Taq Taq oilfield to another field this month. The new pipeline would connect that field to the border.

The company is also drawing up plans to export gas to Turkey.

"We are developing plans to install a gas transport infrastructure, said Mr Hayward, who formerly headed BP.

"The additional infrastructure required to connect Kurdish gas to the Turkish gas network is modest and technologically straightforward."

Genel's plans will be met with displeasure by Iraq's central government, which has for some time been feuding with both Turkey and the Kurdish Regional Government (KRG) over their cooperation in the energy sector.

Baghdad's displeasure became apparent on Tuesday, when its air traffic controllers refused to allow the Turkish energy minister Taner Yildiz the right to land at the airport in Erbil, where he was due to attend a conference.

An article by Iraq Oil Report published that day suggested that Turkey and the KRG were close to signing a large energy contract that would result in a Turkish government-backed oil company developing Kurdish oilfields and building pipelines.

"We are having serious discussions with the company," the KRG prime minister Nechirvan Barzaniwas quoted as saying.

"We hope they participate in the region."

So far, KRG oil exports flow through Iraq's export infrastructure.

But if Kurdish ambitions to increase production capacity from the current 250,000 bpd to 1 million bpd by 2015 are realised, the existing pipelines will be insufficient.

Turkey is keen to establish close ties with the hydrocarbon-rich KRG in an effort to ensure energy supplies for fast-growing domestic demand.

The two governments in May signed an energy and security agreement.

"We believe that will pave the way for oil and gas exports from northern Iraq to Turkey," said Mr Hayward.

Baghdad is unhappy at what it sees as an infringement on its sovereignty. Relations with Ankara were already strained after Turkey's foreign minister Ahmet Davutoglumade an unscheduled visit to Kirkuk, a city at the centre of dispute between the central government and Erbil, in August.

The Iraqi government also considers the contracts signed by the KRG and international oil companies to be illegal and is refusing to pay for oil produced in the autonomous region at full price.

Genel, which aims to produce 140,000 bpd in the KRG by 2014, also wants to profit from the rising Turkish demand for natural gas.

"Rapid growth in overall [Turkish] gas consumption is expected to continue," said Mr Hayward, who said that gas was the "next phase in the development of the Kurdistan region of Iraq hydrocarbons".

Genel hopes to produce 4 billion cubic metres a year from Kurdish gasfields by 2015.

Mr Hayward said he believed Kurdistan would supply about 20 per cent of Turkish gas demand by the end of the decade.

fneuhof@thenational.ae