Tony Hayward, the former BP Plc chief executive officer who now heads Kurdistan’s largest oil producer, said an export pipeline to Turkey is built, marking a turning point for the self-governing region of northern Iraq.
“The Kurdistan Regional Government has completed a 36-inch pipeline,” Hayward, CEO of Genel Energy Plc, said in a telephone interview yesterday. “The line has now been tied in and commissioning is taking place. This is a major inflection point for Kurdistan.”
Kurdistan, whose economy has boomed with oil exploration since the fall of Saddam Hussein in 2003, estimates its reserves at 45 billion barrels, enough to meet U.S. needs for almost seven years. The new pipeline provides unhindered access to international markets for the first time after years of disputes with the government in Baghdad over export revenue.
While Hayward said Genel is already sending about 50,000 barrels of oil a day on trucks to Turkey, where it receives higher prices than in the domestic market, the pipeline will have capacity of about 300,000 barrels a day.
Genel shares reversed earlier losses, to gain as much as 0.8 percent. The stock traded at 973 pence as of 9:53 a.m. in London. DNO International ASA, a Norwegian producer in the region, climbed as much as 1.3 percent to 16.18 kroner in Oslo.
The Kurdistan pipeline joins Iraq’s main export pipeline to Turkey after a Baghdad-controlled metering station, Hayward said. That will give the Kurds full control, bypassing the federal government.
The pipeline will become operational by the end of the year, Ashti Hawrami, the KRG minister of natural resources, said on Oct. 3. The KRG signed a deal in April to sell oil and gas directly to Turkey. Turkey also set up a state oil company that has taken stakes in Kurdish oilfields, Hayward said.
“There are always risks, but you have to look at the track record of delivery,” Hayward said. “That gives me confidence that the agreement between Turkey and the Kurdistan region is being followed through.”
The KRG halted crude exports through the government-run link in December amid disputes with the Oil Ministry in Baghdad over revenue from crude sales and payments owed to companies such as DNO and Genel. Hawrami said that the region will export 1 million barrels a day by 2015 and 2 million barrels a day by 2019.