Genel Energy, chaired by former BP head Tony Hayward, is betting on a major deal with Turkey to jointly develop gas fields in Iraqi Kurdistan which will help Ankara reduce its reliance on Russian supplies after relations soured with Moscow.
The deal, if it goes through, could help London-listed Genel regain investor confidence after it steeply downgraded its oil reserves two months ago – leading to it losing a third of its market value, contributing to its biggest-ever annual loss and piling pressure on Hayward.
The company, which owns most of the Bina Bawi and Miran fields, is in talks to sell a stake to TEC, a joint venture that includes the international arm of state-owned Turkish Petroleum, according to several sources involved in the negotiations.
“(TEC) want to invest in the entire value chain of the project,” one source said. The sources did not disclose the size and price of the stake being discussed.
The deal would provide a new source of gas for Turkey, which has scrambled to find alternatives after relations with major supplier Russia deteriorated sharply after the Turkish airforce downed a Russian warplane late last year.
Entering the partnership, which would also include the construction of a pipeline and storage facilities to connect the field to Turkey, would also reinforce ties between Ankara and Iraqi Kurdistan, two neighbours battling Islamic State.
Genel hopes to complete the negotiations with the partner by the end of the year, Chief Executive Murat Ozgul said at the company’s annual general meeting in London on Wednesday. He did not name the partner.
Genel, one of the main oil producers in Iraqi Kurdistan, has made no secret of plans to bring in a partner for the fields, which it operates and holds an 80 percent stake in.
Its growing focus on Turkey was underlined when Turkish renewable energy company Bilgin Enerji bought a 10.5 percent stake in the company this month to become its second largest shareholder after Turkish billionaire Mehmet Karamehmet.
Genel plans to export up to 20 billion cubic metres of natural gas per year from the fields, located some 300 km (186 miles) from Turkey and with gas reserves of around 11 trillion cubic feet. It has said it expects the fields to take around three years to develop and to start production in early 2020.
Turkey currently consumes approximately 50 billion cubic metres of gas per year, of which more than half is provided by Russia, according to Genel’s website.