Turkey’s Genel Enerji Plans To Sell Portion Of Its Oil Holdings In Kurdistan To Expand Work There

Tawke oil field which Turkey's Gene Enerji owns a percentage of
Source: Reuters

As reported before, Turkey’s Genel Enerji contacted JP Morgan Chase in August 2010 to sell all or part of its shares in oil fields in the Kurdistan Regional Government (KRG). The full details have now come out. Genel Enerji plans on selling stakes in three Kurdish fields to South Korean’s UI Energy for $175 million. The Turkish firm will sell 5% of its 40% stake in the Dohuk field in the province of the same name, 5% of its 25% share in the Tawke field also in Dohuk, and 10% of its 25% portion of the Miran field in Sulaymaniya. Miran is jointly run with England Heritage Oil, while Tawke and Dohuk are managed by Norway’s DNO.

Genel plans on using the profits from the sale to expand its operations in the KRG. It wants to increase production at Tawke from 30,000 barrels a day currently to 60,000 barrels, and boost the Taq Taq field in Irbil, which it is a part owner in along with Addax International, China’s Sinopec, and the KRG, from 60,000 barrels a day to 180,000. Those two are the only fields in the region currently producing oil. The petroleum is used for domestic uses and sold illegally to Iran. It also wants to construct a pipeline from the Taq Taq field to Iraq’s northern line that flows to Turkey, and to conduct exploratory drilling in Kurdistan. All together it estimates that these efforts will cost between $800-$900 million over the next two years.

In mid-2009 the Kurds were allowed to export oil from the Taq Taq and Tawke fields. That quickly ended as the KRG and Baghdad could not agree upon who would pay Genel Enerji and the other foreign operators. Kurdistan, Genel, and others are hoping that a deal will be worked out after a new Iraqi government is formed, as the Kurdish parties have made it one of their demands in joining any new ruling coalition. Genel is betting that the Kurds will be successful, which is why they are going ahead with this sale and expansion plans.

SOURCES

Bloomberg, “Genel Enerji sells northern Iraq oil stakes,” 10/17/10

Gwertzman, Bernard, “Iraq’s Impasse and ‘Confusing’ Politics,” Council on Foreign Relations, 10/6/10

Stigset, Marianne, “DNO Chief Expects Increased Business in Iraq’s Kurdish Region,” Bloomberg, 8/18/10