“Thanks to the changing discourse of the Baghdad government, Kurds have caught a real opportunity to create their own income by selling their own oil in Iraq,” Hayward said, adding that Kurds are unlikely to wait for the approval of the central Iraqi government to sell their own gas, as they selling oil.
The Baghdad government and the KRG have recently reached a deal to ease tensions over Kurdish oil exports and civil service payments from Baghdad. Under the agreement, Iraqi Kurdistan will contribute 150,000 barrels of oil exports per day, equal to around half of its overall shipments, to the federal budget.
According to Hayward, the history books will refer to 2014 as a turning point for Kurdish oil and gas for three major reasons.
“First of all, they have built an infrastructure to carry their energy resources to global markets with Turkey and they managed to sell their oil abroad. Secondly, the Islamic State of Syria and the Levant [ISIL] has arisen and changed the map. The KRG has suddenly found a new neighbor just next to it: ISIL, which controls all export roads for Iraqi oil. So it is now impossible to export Kirkuk oil, which constitutes over 10 percent of Iraq’s overall oil production potential, without using the KRG infrastructure. Thirdly, the new Baghdad government has a mindset that is much more open to negotiating with the KRG,” he said.
Hayward also noted that the KRG now has the required infrastructure to sell gas.
“There are some really large gas resources in the KRG, just next to Turkey. And it is really low cost to carry this gas to Turkey. The carrying of Kurdish gas to the Turkish market is planned to start by 2017 or 2018 … Over 20 billion cubic meters (bcm) of Kurdish gas may be carried to the Turkish market by 2025, which will make up 30 percent of the country’s gas consumption at that point. Therefore, the KRG’s gas market is now most attractive sector for Turkish companies,” he said.
Hayward said they had recently discovered two huge gas reservoirs in the region, with a potential gas volume of 12 or 20 trillion cubic meters, almost half of the volume of Azerbaijan’s Shah-Deniz field.
Over 25 million barrels of KRG oil have been sold via Turkey up to now, according to Turkish Energy Minister Taner Yıldız.
“This makes really big money for the KRG, although this amount is lower than the KRG originally deserves based on their constitutional rights. Actually, oil exports from the KRG do not matter so much for Turkey in economic terms, what really matters for Turkey are the KRG’s gas exports,” Hayward said.
The Genel Energy boss also said he does not see ISIL as a “long-term actor” in the region, but stressed that its effects “will be with us in the region for a long time.”
Genel Energy has been steadily increasing its oil production since 2007. It produces 130,000 barrels of oil per day in the Taq Taq oil field, while the amount produced in the Tawke oil field is 110,000 barrels per day, Genel Energy President Mehmet Sepil told Anadolu Agency on Nov. 21.
“Our target for next year is to increase the total combined production of the two fields to 350,000 barrels per day. We expect a significant rise in our production,” Sepil said.