Update On Kraqi's Problems -- Platts -- March 16, 2017

Updates

March 28, 2017: in the original post below, this data point:

Taq Taq, it turns out was "all talk talk" -- original estimates were abruptly/suddenly/unexpectedly cut in half in February 2016 when Genel stunned investors: cut estimates to 356 million bbls from 683 million bbls with gross remaining 2P reserves as of December 2015 of only 172 million bbls

Now, Reuters has an update, and it's not good news for Genel or its investors.

Genel Energy's market value collapsed to an all-time low on Tuesday after it said for a second time that its flagship oilfield contains less crude than expected, dealing another blow to chairman Tony Hayward to rescue the indebted Kurdish producer.

Since listing in 2011 and claiming to be the largest independent UK listed firm by reserves, Genel has been hit by a string of unsuccessful exploration campaigns in Africa and reserves at its largest Iraqi Kurdistan field shrinking to just a tenth.

Original Post 

Whenever I come across an article with a headline or a leading sentence with both "Iraq" (or any other Middle Eastern country) and "problem" (or "obstacle," or some synonym), it puts a slight smile on my face, momentarily at least. Throw in "unexpected" and the slight smile becomes a bit bigger.

So it was with this Platts headline over at Twitter which had all three words: Iraq's unexpected decision to exclude Shaikan crude oil from its export pipeline reflects much bigger problems. The tweet took me to this story: Iraqi KRG faces obstacles to maintain crude oil export quality. Data points:

• KRG: the regional government of semi-autonomous Iraqi Kurdistan (or Kraqi for some old Brits, as in "by Kraki")
• appears to be struggling with quality of its oil exports
• Kurdish crude is delivered to Turkish terminal at Ceyhan (and I thought the Turks and Kurds didn't like each other; silly me)
• problems appeared soon after signing a landmark supply agreement with Rosneft aimed at opening up new markets for Kurkish crude
• appeared in a regulatory filing by Gulf Keystone Petroleum
• Gulf Keystone Petroleum: produces heavy crude from Kurdistan's giant Shaikan field
• result?  Kraqi decided to stop accepting Shaikan crude for blending (think blending light Bakken with heavy Canadian oil in Keystone pipeline)
• Kraqi has agreed to shoulder the cost of transporting Shaikan crude by truck (CBT) for export as a stand-alone product AND it will continue to pay Gulf Keystone a flat $15 million/month for current/past exports
• Platts then goes into a number of problems for Kraqi's Shaikan oil
• Shaikan crude: low API (heavy oil); high sulfur
• the fact that this decision was made suggests to analysts that Kraqi is having trouble bringing on its new fields
• Taq Taq (or, as I call, it "all talk talk") -- joint venture between Genel Energy (Turkish) and Sinopec (Chinese); one of two major fields that has been the mainstays of Kraqi's light crude oil and production
• Tawke (or, as I call, it, "more talk") is the second of two big Kraqi fields (the other Taq Taq)
• Taq Taq, it turns out was "all talk talk" -- original estimates were abruptly/suddenly/unexpectedly cut in half in February 2016 when Genel stunned investors: cut estimates to 356 million bbls from 683 million bbls with gross remaining 2P reserves as of December 2015 of only 172 million bbls
• Taq Taq could shrink to as little as 50,000 bopd by 2018, from 80,000 now
• Tawke: averages 100,000 bopd; proven and probably reserves of 500 million bbls
• and more and more
• Kraqi's other large field, Kirkuk is in territory disputed by Eribil and Baghdad
• suffice it to say, as Platts says, "all this adds up to a ton of trouble"

Or a barrel of monkeys.

And still more and more at the link.