Heritage deal in Iraq possible watershed

June 10, 2009 at 2:48 PM
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BAGHDAD, June 10 (UPI) -- The pending merger of Heritage Oil and Turkey's Genel Energy for oil developments in Iraqi Kurdistan may be a watershed for the region.

Heritage combines with Genel to examine the possibility of linking northern Iraqi oil fields with pipelines, the Financial Times reports.

Despite lingering disputes over the laws governing the Iraqi energy sector, exports from the Kurdish Taq Taq and Tawke oil fields began June 1 with revenue deposited into federal accounts. The Kurdish developments are complicated, however, by a lack of payment agreements for the field operators.

The Tawke Field began exports at an initial rate of around 60,000 barrels per day, while the Taq Taq field north of Kirkuk trucks oil at the rate of 40,000 barrels per day to Turkish ports.

Paul Atherton, the top financial official at Heritage, said the merger with Genel will create a "new regional giant" in Iraqi Kurdistan, which is peppered with smaller developers.

Iraq is moving to secure foreign investments in its oil and gas fields with hopes of awarding long-term contracts perhaps by the end of June.

Baghdad says the companies winning the bidding process would need to come forward with $2.4 billion in loans for the eight fields on the bidding block, suggesting only the oil and gas supermajors will be able to compete.

The Financial Times reported earlier this week the Korean National Oil Co. and Geneva-based Addax Petroleum have signaled they could move jointly on Kurdish deals as well.

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