01-30-2012, 11:46 PM
My 1000 foot quick response (I need to get back to the beach):
Whether you are interested in GKP or not, there is a fascinating shift of power going on in Iraq right now. For those of you that don't know, when things stabilized in Iraq and the new government was elected the Iraq Central Government (ICG) was at odds with Kurdistan (one of the provinces in Iraq) over the terms of oil sharing contracts with oil companies.
The ICG adopted an approach of federally controlled agreements and agreements that pay very small margins to the majors. Additionally, since the Kurdistan contracts were fundamentally different from this approach, the ICG also said that if you do business with Kurdistan we will black list you from all of our oil fields in the south.
So the super majors jumped on board with the ICG probably due to some political reasons (US was still supporting the ICG very strongly) and hope that a new oil and gas law would be resolved which would give better terms. The small and unknown oil companies moved into Kurdistan. This all happened 3-4 years ago.
Now, if we fast forward to today, the ICG still doesn't have a new oil and gas law, haven't been providing their portion or the agreements (roads/infrastructure), haven't been making payments for the oil and the sectarian violence has returned. Meanwhile in the north (Kurdistan) huge fields were being found (enter GKP here), there was no violence, and the Kurd government was building a strong relationship with Turkey (key for a pipeline to export their oil).
So the super majors are sitting in the south, looking at high risk/low margin almost depleted fields with no progress by the ICG in the past 3 years. The straw that broke the back was dropped and Exxon signed a deal with the Kurdistan government last summer at the risk of losing their deals in the south. Now it appears as though Total is jumping on board, with strong rumours about Chevron and Conoco Phillips soon to follow.
Essentially, the super majors, with very strong political backings are walking away from the ICG. Why? Because in the last 3 years Kurdistan has turned into the last great onshore reservoir of hydrocarbons. So large in fact that if they start moving their oil the united nations could stop the flow of oil from Iran with no disruption to the world demand for oil. Given the recent nuclear statement by Iran, does anyone think that this isn't being discussed behind closed doors?
My guess, Kurdistan will declare independence from Iraq with the blessing of the UN, a large number of super majors will move into Kurdistan consolidating the diverse number of tiny oil companies, and this new nation will receive the massive economic, political and military support from the world. It just so happens that the company I am invested in, GKP, is right in the middle of this shift in power.
Health and Happiness and PDYOR,
hemi
Whether you are interested in GKP or not, there is a fascinating shift of power going on in Iraq right now. For those of you that don't know, when things stabilized in Iraq and the new government was elected the Iraq Central Government (ICG) was at odds with Kurdistan (one of the provinces in Iraq) over the terms of oil sharing contracts with oil companies.
The ICG adopted an approach of federally controlled agreements and agreements that pay very small margins to the majors. Additionally, since the Kurdistan contracts were fundamentally different from this approach, the ICG also said that if you do business with Kurdistan we will black list you from all of our oil fields in the south.
So the super majors jumped on board with the ICG probably due to some political reasons (US was still supporting the ICG very strongly) and hope that a new oil and gas law would be resolved which would give better terms. The small and unknown oil companies moved into Kurdistan. This all happened 3-4 years ago.
Now, if we fast forward to today, the ICG still doesn't have a new oil and gas law, haven't been providing their portion or the agreements (roads/infrastructure), haven't been making payments for the oil and the sectarian violence has returned. Meanwhile in the north (Kurdistan) huge fields were being found (enter GKP here), there was no violence, and the Kurd government was building a strong relationship with Turkey (key for a pipeline to export their oil).
So the super majors are sitting in the south, looking at high risk/low margin almost depleted fields with no progress by the ICG in the past 3 years. The straw that broke the back was dropped and Exxon signed a deal with the Kurdistan government last summer at the risk of losing their deals in the south. Now it appears as though Total is jumping on board, with strong rumours about Chevron and Conoco Phillips soon to follow.
Essentially, the super majors, with very strong political backings are walking away from the ICG. Why? Because in the last 3 years Kurdistan has turned into the last great onshore reservoir of hydrocarbons. So large in fact that if they start moving their oil the united nations could stop the flow of oil from Iran with no disruption to the world demand for oil. Given the recent nuclear statement by Iran, does anyone think that this isn't being discussed behind closed doors?
My guess, Kurdistan will declare independence from Iraq with the blessing of the UN, a large number of super majors will move into Kurdistan consolidating the diverse number of tiny oil companies, and this new nation will receive the massive economic, political and military support from the world. It just so happens that the company I am invested in, GKP, is right in the middle of this shift in power.
Health and Happiness and PDYOR,
hemi