Executive of Genel Energy, the Turkish company has confirmed a deal with Heritage Oil and this way has increased its stake of the Miran exploration block situated at the north Kurdish area of Iraq. The provinces situated in the Kurdish area are emerging as new leaders of energy because of the storage of approximate 10 trillion cubic feet amount of natural gas in the area. The deal is being executed despite the dispute between the central government in Baghdad and the leaders of the Kurdish Iraq. If it were the international companies like Chevron or Exxon Mobil, they could have handled the situation, but for a company like Genel Energy it may be as risky as gabling.
In the year 2007 Kurdistan Regional Government, which is semiautonomous in nature, granted a contract to Heritage Energy Middle East Ltd. and allowed the company a share in the production of oil from Miran Block. Genel, the Turkish energy company became of part of this in 2009 on the basis of the terms set by PSC, and now this company owns 51% of stakes in the project because of the deal worth millions of dollars with Heritage.
According to Tony Hayward, CEO, Genel Energy, “this deal has created a superb opportunity for Genel to have joint ownership of commercial gas discovery and assets which are available in Kurdish Iraq”.
This company has confirmed that, an analysis of Miran was done in March for Heritage and that shows there are 10.5 trillion cubic feet of natural gas in the area. The natural gas has created a brilliant opportunity for this Turkish company to get recognized as the regional energy hub depending upon the number of pipelines it is planning to set in the area. This whole picture can become a bit risky because of the disagreement between central government and Kurdish regional government on the energy issue.
A statement issued from Baghdad has hinted that companies which are right now signing deal with the Kurdish regional government may get blacklisted in future. Kurdish government retaliated in April and has stopped exporting oil, but has sent a few shipments to Turkey all the same. All these threats have been brushed off by French company Total and another company known as Marathon Oil. Kirk Sowell, the publisher of biweekly newsletter names Inside Iraqi Politics, has explained that though there is threat, the reward is also going to be pretty big for the companies. The situation is a bit different for Genel though. In case political alliances changes and the new rule emerge due to the crisis in Syria, things will turn “extremely detrimental for Genel”.
The spokeswoman of U.S. State Department, Vitoria Nuland has told the reporters about the warning handed to the U.S. energy companies by Washington about the problems of working with politically torn Iraq. It is true that business is a separate affair from politics, but still “there may be some threats for these companies”, according to her.
Tony Buckingham, founder of Heritage oil and so called former mercenary has opined that the deal has a “substantial worth” for all the shareholders. Sowell has stated that the deal with Genel is not a fluke like the deals made by KRG with Exxon Mobil or Chevron.
He also said that, “As Genel is at par with the energy policy of Kurdish regional government it is not as shocking as it had been in the case of Exxon or Chevron”.