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Genel to convert Miran field exploration into $2.5 billion project

Genel to export Kurdish Iraq natural gas to Turkey

Genel Energy is considering a $2.5 billion gas central processing facility to turn Miran gas field into production.

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.

In 2008, Heritage Oil could access the results of 300km of 2D seismic data, showing a promising potential of the Miran field in two zones, Miran East and Miran West.

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.

With interests in six production sharing contracts in the Kurdistan Province of Iraq, Genel is in the same time the largest producer and the largest owner of crude oil and gas in this region.

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.

Through its development program, Turkey intends to develops its conventional and unconventional oil and gas resources to become self-sufficient.

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.

Genel initiated the front end engineering and design (FEED) work for a gas central processing facility (CPF) to treat the associated gas and export it to Turkey.

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.

Genel expects the FEED to be completed by mid 2013 in order to make the final investment decision (FID) in following and turn the Miran gas plant into commercial operation by 2015. 

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.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer

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