Crude from Gulf Keystone Petroleum Limited’s (LON:GKP) Shaikan will have to take a longer road to export, the company has revealed, because the oil will no longer be accepted at the Kirkuk-Ceyhan export pipeline, in Fishkhabour. northern Iraq.
Presently, GKP trucks its crude for delivery into the system at Fishkhabour, but soon the crude trucking operation will have to take it all the way for delivery to market in Turkey.
This new arrangement was described as being part of the Kurdistan Regional Government’s (KRG)management of the overall crude export quality.
It comes into effect from the end of February.
GKP told investors that the economic benefit it receives from the KRG will be the same, despite the changes. It highlighted that the authorities intend to take full responsibility, at its own cost, for the extra transport costs.
As a result, GKP expects it will continue to receive a fixed payment of US$15mln per month from the KRG for crude sales.
Talks between GKP and the KRG continue regarding commercial and contractual conditions, including key issues such as payment schedules and long term crude marketing arrangements.
"This new export route arrangement confirms there is a market for Shaikan crude as a standalone product while also ensuring Gulf Keystone, and our partner MOL, remain financially and commercially neutral under this arrangement,” said chief executive Jón Ferrier.
“We continue an active dialogue with the MNR to achieve satisfactory commercial and contractual clarity around payments and marketing which remain key to achieving production growth and realising full value potential."