Turkey-Kurdistan Pipeline Is Set for Midyear Completion

Genel Energy Plc (GENL) Chief Executive Officer Tony Hayward, the former head of BP Plc (BP/), expects a pipeline transporting oil from Iraqi Kurdistan to the Turkish border to be completed by about the middle of the year.

“The conversion of an existing gas line to an oil line can get nine-tenths to the Turkey border” and the rest of the capacity will be newly built, he said yesterday in an interview. “They’ll have that infrastructure by the middle of the year.”

Genel, the largest producer in Iraq’s Kurdish region, also said yesterday that the first of five Chia Surkh wells flowed 11,950 barrels of oil a day and 15 million cubic feet of gas. The company began drilling a second well this week. Hayward said the field may hold more than 300 million barrels of oil equivalent.

The company rose 6.4 percent to 850 pence in London.

The pipeline will allow the semi-autonomous Kurdish region to bypass control over its oil exports by the central government in Baghdad and ship them directly to Turkey. Genel, Exxon Mobil Corp. and DNO International ASA (DNO) are among companies caught up in disputes between the Iraqi administrations over the right to control contracts, territorial claims and crude oil revenues.

Oil from northern Iraq is currently trucked to the border at Fishkabur, creating a bottleneck, Genel says on its website.

The pipeline also gives Turkey a foothold in the region’s energy industry. Genel is talking to four Turkish utilities to sell gas from its Miran field, Hayward said, declining to name them. Genel said in February it had 3.8 trillion cubic feet of recoverable resources in Miran and 90 million barrels of oil.

Energy Minister

Turkey has informed the Iraqi government that it’s ready to build new pipelines to transport oil from Kurdistan, Turkish Energy Minister Taner Yildiz told reporters yesterday in Ankara.

Turkish Prime Minister Recep Tayyip Erdogan met Nechirvan Barzani, leader of Iraq’s Kurdish region, in Ankara last month.

“We may add new pipelines to our pipeline from Kirkuk, and among them may be a natural-gas pipeline,” Erdogan said on CNN Turk after the meeting. Northern Iraq had signed a commercial agreement with Turkey based on the region’s constitutional right to 17 percent of Iraq’s oil revenue, he said.

A gas pipeline joining the Taq Taq site in northern Iraq with the Iraq-Turkey Pipeline at Fishkabur is being built. It’s expected to reach the town of Dohuk about 40 kilometers from the Turkish border in the second quarter, Genel said in February. It plans to boost Taq Taq’s capacity to 200,000 barrels a day.

To contact the reporters on this story: Nidaa Bakhsh in London at nbakhsh@bloomberg.net; Chris V. Nicholson in Paris at cnicholson22@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net

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