Genel chief says Iraqi Kurdistan ripe for consolidation as oil plunges
December 18, 2014
LONDON,— Genel Energy Plc (GENL), the company headed by former BP Plc Chief Executive Officer Tony Hayward, sees acquisition opportunities in Iraqi Kurdistan as oil prices plunge and the region resolves differences with Baghdad.
“We expect to see a lot of consolidation both in Kurdistan and globally,” Genel President Mehmet Sepil said in London today. “Most of the big companies were created through mergers at the time of political or economic crisis.”
Genel has spent about $1.4 billion on acquisitions and plans to continue to grow, Sepil said. While crude futures have slumped about 44 percent this year to trade below $55 in New York, the London-based explorer produces oil at a cost of $5 a barrel, Sepil said. “Even if the price falls to $20 a barrel, we are making a lot of profit.”
An agreement between the Kurdistan Regional Government and Baghdad over oil exports will create a wave of consolidation both in the semi-autonomous region and the country as a whole,www.Ekurd.net Sepil said. Disagreement between the two authorities had slowed investment by forcing international companies to choose between them, he said.
Genel shares jumped 6.3 percent to 662.5 pence, valuing the company at 1.84 billion pounds ($2.88 billion) at the close in London.
Agreement Reached
The KRG is set to produce 1 million barrels of oil a day by the end of 2015, it said on Nov. 7. It plans to export 500,000 barrels a day via neighboring Turkey by the end of March. The region had been exporting oil in defiance of Baghdad until they reached an agreement last month on sharing revenue, paving the way for a broader agreement on the future of the region.
ExxonMobil Corp. and Chevron Corp. are among more than two dozen international oil companies with a combined 35 licenses in the area. The companies export about 400,000 barrels a day of crude, pumping most of it through a Turkish pipeline to the Mediterranean.
Kurdistan has become a key contributor to the Iraqi economy, Sepil said. The Kurds are protecting the oil fields from Islamic militants and provide stability and steady production, he said.
Kurdish forces helped to repel Islamic State militants who threatened the region’s energy boom by taking a vast swathe of northern Iraq and Syria this year.
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