Genel Energy ramps up presence in northern Iraq

ISTANBUL - Hürriyet Daily News

Genel Energy, which is traded on the London-bourse, is expanding in the northern Iraqi oil fields. Company photo

Ankara-based Genel Energy has agreed to acquire an additional 26 percent interest in the lucrative Miran exploration block in northern Iraq from the London-based Heritage Energy’s regional subsidiary for $156 million.

With the deal Genel, an energy company traded on the London Bourse, will increase its total share in Miran to 51 percent and gain the majority stake of the second largest oilfield in northern Iraq after Chia Surkh.

Genel holds stake in eight oil and gas fields in the territory of the Kurdistan Regional Government (KRG) in the country’s north and owns the largest stake in many of these fields.

The company believes Miran is capable of meeting six or seven years’ worth of gas demand from Turkey, Genel’s Executive Board Chairman Mehmet Sepil said.

Turkey’s energy security

“Buying the majority shares in Miran not only make us the largest energy player in the region, but places us at a special point as we can contribute to Turkey’s energy security,” he said in a press release yesterday.

Currently, Turkey meets it gas demand, which stood at around 46 billion cubic meters last year, with exports from Russia, Azerbaijan and Iran. It also buys Nigerian, Algerian and spot market LNG. A $7 billion deal with Azerbaijan’s state-run Socar for the Trans-Anatolia Pipeline (TANAP) project, which will carry Caspian gas to western Turkey, also spurs hopes that the energy-hungry country will both diversify its supply and even begin to export gas to the West.

In addition to the stake sale, Genel Energy will provide a bilateral loan of $294 million to Heritage, secured on Heritage’s shares in its subsidiary Heritage Energy Middle East Limited (HEME) as well as HEME’s remaining working interest in the Miran block, Genel said in a filing to the London Stock Exchange yesterday.

“Assuming joint operatorship of the Miran Block will allow the company to take the lead in driving the development of the Miran Block forward to meet the growing needs of the domestic and Turkish markets,” it said.

“We believe that as an Anglo-Turkish company we are uniquely placed to execute the full field development of the Miran Field, including gas exports to Turkey, and we aim to build a material gas business alongside our existing oil business in the medium term,” said Genel Energy Chief Executive Officer Tony Hayward, who is a former BP chief executive.

“Our belief in the significant potential of the region is stronger than ever and we aim to continue to play a leading role in the consolidation and development of the oil and gas sector in Kurdistan,” he said.

The deal comes at a time when tensions over the rights to sign energy search deals with foreign companies are high between the Arbil administration in the north and the central Baghdad government.