Gulf Keystone Petroleum is optimistic about resuming exports in Kurdistan. However, it has begun searching for local offtakers for its Shaikan oil.
Exports via the pipeline to Turkey halted on March 25. This suspension has resulted in the loss of production of around 4.3 million barrels gross, or around 11,800 barrels per day on a full-year basis. The company had expected production of 46,000-52,000 bpd this year.
“Almost all” work on Shaikan has halted, in order to save cash. The drilling rig has been released, following completion on the SH-18 well.
Gulf Keystone CEO Jon Harris said the stoppage had changed the company’s perspective. “Following the suspension of Kurdistan crude exports on 25 March 2023 and continued delays to oil sales payments, our focus has shifted to aggressively reducing all costs to preserve liquidity, while maintaining safe operational readiness to quickly restart production. We are now exploring potential options to sell our crude to local buyers.”
Initial sales could come from PF-1, in the west of the licence, the company said, “at prices in line with the local market”. It has the logistics in place to restart trucking operations quickly, it said.
Gulf Keystone had previously trucked Shaikan crude to the Turkish border, for onward transport via pipeline to Ceyhan in 2015. It ended trucking in 2019.
Despite these plans, Harris said the company saw the export issues as temporary. Approval of the Iraqi federal budget this week was a “step in the right direction towards formal recognition of Kurdistan production by Iraq”, he said.
It “potentially paves the way for monthly budget transfers from Iraq” to Kurdistan.