Genel deal in the pipeline

Though Genel’s ability to tap its full commercial potential was constrained last year, it still trebled operating profits to $184m. A step-up in investments meant that Genel recorded a net-cash outflow, but with $700m in cash on the balance sheet, investors needn’t fret about a looming capital shortfall.

Production was flat at 44,000 barrels of oil per day, but this was constrained by export capacity as Genel's crude was transported by road for most of the year. However, a dedicated pipeline connecting oilfields in Kurdistan to oil ports in Turkey was completed during the period. This is highly significant for Genel as it will facilitate a 50 per cent increase in production this year. It will also open up overseas markets, allowing Genel to sell a higher proportion of its output at international prices.

Negotiations continue between the KRG and officials from Iraq and Turkey over a constitutional impasse that has stifled energy exports from Kurdistan. But there are signs that Baghdad is now more inclined to come to strike a deal with the KRG. Either way, with thousands of barrels of oil already piped through to Turkey’s Mediterranean port of Ceyhan awaiting export, it is likely that the Kurds will simply push ahead with their existing export deal with Turkey if the Iraqi government digs its heels in. In any case, the protracted negotiations over the terms of Kurdistan’s oil exports means that Genel has pushed back the signing of a formal gas-sales agreement with the KRG to the second half of 2014.

Away from Kurdistan, Genel will soon start work on the Hagar Qim prospect off the coast of Malta, while its drilling programme in Africa is targeting over 900m barrels of prospective resource this year.