Genel deal may spur new mergers in Iraq
Bloomberg
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DNO International, the first foreign company to produce oil in Iraq since 1972, said the start of crude exports from the country’s north may spur more takeovers of companies operating in the region.Heritage Oil this week agreed to buy Turkey’s Genel Enerji for $2.5 billion, creating the biggest producer in Iraq’s north. Addax Petroleum, the Geneva-based oil producer that also operates in the area, on June 8 said it was in talks with third parties on a "potential transaction."
"We’ve seen a considerable increase in the focus on the area," Helge Eide, DNO’s chief executive officer, said in Oslo Thursday. The Genel acquisition "could possibly be the beginning of several more."
The start of exports and reduced violence in Iraq as a whole has spurred interest in the country, which is estimated to hold the third-largest oil reserves in the world. Oil Minister Hussain Al-Shahristani said Wednesday that exports from the semi-autonomous Kurdish region are a "positive step." Iraq expects to announce licenses for oilfields in the rest of the country at the end of this month and has qualified 35 companies, including Exxon Mobil, to bid in the auction. DNO started exports June 1 from its Tawke field through a pipeline to the Turkish port of Ceyhan and expects to reach capacity of 50,000 barrels of oil a day within four weeks, Eide said. DNO owns 55 percent of Tawke, which has estimated reserves of 150 million barrels to 370 million barrels.
Addax began exports from its Taq Taq license in the same region this month, where more than 30 companies are active.
The Kurdistan Regional Administration is seeking exports from the Tawke and Taq-Taq fields of 250,000 barrels a day within a year and to ship 450,000 barrels a day from the region by the end of next year, Ashti Hawrami, the region’s minister for natural resources, said in a speech this month. Exports are expected to rise to 1 million barrels a day within four years, he said.
China Petroleum & Chemical Corp. on Wednesday declined to confirm or deny a report by South China Morning Post that it may bid $8 billion for Addax. China National Petroleum Corp. and China National Offshore are also interested, the paper said.