Genel to export Kurdish Iraq natural gas to Turkey
The Miran natural gas field is located in the Kurdistan Region in Iraq and had been awarded through a production sharing contract (PSC) by the Kurdistan Regional Government (KRG) to the junior company Heritage Oil (Heritage) in 2007.
The production sharing contract is based on a licensed area of 1,015 square kilometers.
Heritage initiated immediately the first test well, Miran West-1, which appeared to be successful in producing 3,000 b/d of crude oil.
In 2009, Genel Energy International bought 25% of the rights on Miran from Heritage.
Then a second appraisal well, the Miran-West-2 was performed and yielded 25 million cf/d of natural gas and condensate.
Following these discoveries, Heritage and Genel developed an appraisal program for the period 2011 and 2012 including 3D seismic campaign.
In 2011, the Turkish Genel Energy International merged with Valares PLC to become Genel Energy, the largest oil and gas company in the Kurdistan Region of Iraq.
In August 2012, Genel made a significant step in buying 26% additional shares of the Miran oil and gas field from Heritage.
With this acquisition, Genel took 51% shares of interests in Miran.
The transaction was based on the conclusions of the appraisal campaign including the additional wells, Miran West-3 and Miran West-4, which returned in the last case 1,350 b/d of crude oil.
In compensation of the 26%, Genel payed $156 million in cash.
Then Genel provided Heritage with a loan of $294 million to be covered by the remaining 49% shares left to Heritage.
For Genel, this operation with Heritage is in continuity of the 44% stake taken in the Bina Bawi to consolidate its position in this Kurdistan Region of Iraq.
Genel works on FEED while completing exploration
Historically positioned across Turkey and the Kurdistan Region of Iraq, Genel is building its growth strategy on the opportunity offered by the Kurdistan Region to make its oil and gas reserves accessible through attractive production sharing contracts while Turkey is a major oil and gas consumer.
But in the meantime Turkey imports 90% of its gas from Russia, Iran and Azerbaijan.
In this context, the development of the associated gas in Miran could find immediately an attractive market.
In order to move fast to seize the opportunity, Genel Energy increased ist shared in Miran production sharing contract through the transaction with Heritage.
The FEED work is performed on the base of 200 million cubic feet per day (cf/d) capacity and could cost $2.5 billion capital expenditure.
Since the Chinese national oil and gas company Sinopec is the other major player in the Kurdistan Region of Iraq, speculations anticipate closer cooperation between the expertise and local connections provided by Genel and the financial power of Sinopec to develop Kurdistan Region resources on fast track.