Genel Energy plans to increase oil exports from Iraq despite Baghdad's opposition.
Following permission from the Kurdish regional government, the Anglo-Turkish exploration company expects to raise its exports from the region to 20,000 barrels a day. In a long-running dispute, the Iraqi government has described the oil export as illegal trade in crude. The authorities want all exports to travel through state-run pipelines and has threatened to seize exports made without its consent and sue the companies who are involved in the unilateral deals.
Genel Energy's operation in Taq Taq, Kurdistan Image: Genel Energy |
In 2011, there was a tentative deal by which the Kurds would send the oil to Baghdad, where it would be sold-on and 50% of the revenues returned to the developers. This has been followed by a payment dispute, with Baghdad stating there was a shortfall in the agreed oil output by the Kurds.
Iraq has the world's fourth largest proven reserves of conventional crude of some 143bn barrels. Oil revenues make up 95% of the country's budget — some of which is earmarked for the Kurdish region. However, exploration in Iraq has suffered the effects of decades of conflict.
Meanwhile, Iraq is considering a proposal for BP to begin work on a major oil field that lies in territory contested by Baghdad and the country's Kurdish minority. The Kirkuk field was discovered in 1927 and has seen years of production decline. However, the Kurds have rejected the deal as an "illegal" step, although the Kurdistan Regional Government has signed deals with ExxonMobil and Chevron.
This leaves oil majors such as BP and ExxonMobil facing their own challenges in this troubled region, where diplomacy is currently playing a more significant role than drilling.
In a separate development, Iraq's state-owned oil exploration company has found at least a billion barrels of crude under the ground in a southeastern province near the border with Iran. This is the country's first oil find in 30 years.