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A week in Oil: Investors focus on Algeria and Kurdistan

January 19 2013, 11:00am
A week in Oil: Investors focus on Algeria and Kurdistan

While UK investors braced for a snowy and icy weekend their attentions were largely fixed on the second day of the In Armenas hostage crisis.

The precise situation on the ground in the remote location, near the Libyan border, remained unclear.

But, with BP and Statoil now flying non essential staff from Algeria the oil market will be paying close attention with some concerns over the longer term consequences.

Experts are already claiming that the siege, and the instability it represents, could be the final straw for certain quarters of the oil and gas community - which has historically had strained relationships with the country.

That said, Algeria is far from an insignificant contributor to the global energy mix. And with 12bn barrels of oil reserves and vast amounts of gas it is certainly too big a resource to disregard in a knee-jerk response.

The north African state is the world's fourteenth largest supplier, indeed the In Amenas operation alone generates almost $4bln a year.

Elsewhere oil investors were also focussed on another geopolitical story - the export battle between semi-autonomous Iraqi Kurdistan and its federal counterparts in Baghdad.

On Friday, Anglo-Turkish oil firm Genel Energy (LON:GENL) said it expects 2012’s revenues to be ahead of previous guidance. Production from the Taq Taq and Tawke fields in Kurdistan averaged 44,500 barrels of oil per day. The company says sales for 2012 are expected to total $330mln.

The oil was sold into both domestic and export markets. This includes the recent exports (by truck) into Turkey, rather than though the Iraqi route.

This move has not been well received in Baghdad, with the authorities reportedly telling oil companies to stop what it calls ‘illegal’ exports and threatening to sue Genel.

Genel, however, said in this morning’s statement that had been given permission by the Kurdistan Regional Government for the exports, and this authority is ‘consistent with the Iraqi Constitution of 2006, the Kurdistan oil and gas law of 2007 and the PSC governing operations at Taq Taq’.

“We are today exporting oil to Turkey in accordance with the authority granted to us by the Kurdistan Regional Government and as the largest independent operator in Kurdistan, are well placed to take advantage of regional opportunities for a broader export market as the political situation continues to develop," said chief executive Tony Hayward.


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