Gulf Keystone Petroleum Share Discussion Threads

[nufc9] 27/1/2023 12:59

Trafigura Ends Oil Deal With Kurdistan After Snub at Davos

Bloomberg) -- Commodities trading giant Trafigura Group is ending a relationship with the government of Kurdistan in northern Iraq, a fresh blow to the region’s ability to sell its oil independently.

The parting of ways comes after Trafigura failed to renegotiate the terms of its contract with the Kurdistan Regional Government following a drop in the price of Kurdish oil, according to a person familiar with the matter. After the Kurdistan government refused to renegotiate, Trafigura pinned its hopes on talks with Prime Minister Masrour Barzani in Davos, but a planned meeting last week was canceled by the Kurdish leader at the last minute without explanation, the person said, asking not to be named as the matter wasn’t public.

Trafigura was one of several trading houses that, starting in 2014-15, lent billions of dollars to the cash-strapped government of Kurdistan in exchange for future oil sales, in the process helping to finance its bid for independence. Oil is the lifeblood of Kurdistan’s economy, accounting for more than half the government’s revenues, and the exports through Turkey have underpinned its autonomy from Baghdad. For the traders, the deals with cash-strapped Kurdistan represented a potentially lucrative opportunity to secure new flows of oil.

But selling Kurdish oil has become more difficult in the past year as Baghdad — which disputes the autonomous region’s right to sell its oil independently — has stepped up legal threats against buyers at the same time as a flood of discounted Russian oil has weighed on prices.

“After working together successfully over a number of years, the KRG and Trafigura are amicably parting ways, bringing to an end their long-term contractual arrangements,” the two sides said in a joint statement emailed by a Trafigura spokesperson.

After the Davos snub, Trafigura had been preparing to send an acceleration notice to the Kurdistan government, demanding immediate repayment of the money it was owed, the person said. As of last week, the trading house was owed some $273 million in prepayments it had made for future oil flows.

Baghdad has long protested Kurdistan’s oil sales, but it has stepped up a campaign against them in the past year in the wake of an Iraqi court ruling in February that found the federal oil ministry should have oversight of Kurdish production. In August, Iraq’s state-run oil marketing company SOMO sent a letter to traders warning them of legal action if they bought Kurdish oil without Baghdad’s approval. Kurdistan’s oil exports of about 400,000 barrels a day are a small fraction of Baghdad’s sales of more than 3 million barrels.

There’s evidence that Baghdad’s threats had an impact. Tanker tracking data monitored by Bloomberg show that shipments of Kurdish crude to ports in Spain, Greece and Italy dropped sharply from the middle of 2022, with flows increasing to Israel, Croatia and China in the second half of the year and into the start of 2023.

The Kurdistan government owed a total of $3.5 billion to oil buyers at the end of June last year, according to its latest audited oil accounts. Meanwhile, $620 million of oil revenues were stuck in bank accounts in Lebanon as a result of the country’s financial crisis, according to the accounts. The importance of the Lebanese accounts for Kurdistan’s oil wealth became public thanks to a legal battle between a company controlled by veteran trader Murtaza Lakhani and Lebanon’s BankMed SAL.

Read more: Billion Dollar Broker: How One Man Managed a Nation’s Oil Wealth

The Kurdistan government has itself been seeking to renegotiate the prices it pays to oil producers in the region. ShaMaran Petroleum Corp. announced in October that its Kurdish unit had agreed to change the benchmark against which its crude was priced from Dated Brent to Kurdistan Blend, known as KBT. Separately, another producer said the change amounted to a $10-a-barrel reduction in prices for September.

Still, not all oil producers in Kurdistan have agreed to a change. DNO ASA’s managing director said in November that it was “not at this time engaged in active discussions” with the Kurdistan government about a change to the pricing formula. Genel Energy Plc’s chief financial officer told investors last week it “had not accepted any change in pricing mechanism.”

In Davos last week, Barzani was focused on shoring up political support for Erbil as well as attracting new investment. He met with the prime ministers of the Netherlands and Belgium, as well as former British prime minister Tony Blair, among others, according to the Kurdistan government’s website.

[highlander7] 27/1/2023 12:16

"Not yet public but ruling was expected to favor Baghdad"

But ruled in the Kurds favour instead.

H7

[punter26] 27/1/2023 12:09

Michael Knights
@Mikeknightsiraq
"For a good backgrounder on this, see






Quote Tweet
Bilal Wahab, PhD
@BilalWahab
·
10h
The Int. Commercial Court in Paris has issued an arbitration ruling on claim filed by Baghdad ag. Ankara for the latter allowing #KRG to export oil via IQ-Turkey pipeline w/o consent frm Baghdad per the pipeline agreement. Not yet public but ruling was expected to favor Baghdad
Show this thread
7:30 AM · Jan 27, 2023 "

[bang_gone] 27/1/2023 11:19

A lot of big rollovers today and a weird lump of decent sells ( maybe) followed by a big sell( maybe )with the lump of sells close to totalling the big sell......It's bent as a nine bob note.Imo the actual volume is a lot lower if you take the above ",trades/transfers/rollover" out

[nobull] 27/1/2023 11:18

"The Int. Commercial Court in Paris has issued an arbitration ruling on claim filed by Baghdad ag. Ankara for the latter allowing #KRG to export oil via IQ-Turkey pipeline w/o consent frm Baghdad per the pipeline agreement. Not yet public but ruling was expected to favor Baghdad"

I think "ag." means "against". Dr. Bilal Wahab is therefore describing the claim.

"ruling was expected to favor Baghdad" could be just a reminder of what was expected. I read that as he doesn't know himself what the ruling is. Why should Dr Bilal Wahab be informed in advance? He is not one of the litigating parties. This may be why the KRG is slowing down payments in case its income from use of the pipeline is about to stop.

[johnbuysghost] 27/1/2023 11:13

Getting tougher for 'those behind the curtain' to pick up GKP shares.
Practically nothing available now.

[johnbuysghost] 27/1/2023 10:30

The US want Kurd oil and gas flowing, so they want GKP superbad too.

[bang_gone] 27/1/2023 10:28

The Company also provides regular operational and corporate updates each year, typically in January, June and December.

[highlander7] 27/1/2023 10:25

Sounds to me like the translation wasnt all that good. We will get the actual judgement on RUDAW or one of the other Kurd websites.

[fairenough11] 27/1/2023 10:19

I'll take the "WIN-WIN" comment on board as that is black & white.

On we go!

[nufc9] 27/1/2023 10:19

Article I posted yesterday. Why bother if they believe the ruling (if in Baghdad's favour) will actually be actioned?

Kurdistan President, Turkish Counterpart Highlight Energy Ties

"Both sides stressed their mutual readiness to promote relations between the Kurdistan Region and Turkey in all areas, especially in trade and economic cooperation, and to utilize the existing opportunities to expand the joint partnership of Iraq and the Kurdistan Region with Turkey in the field of energy, which can actively contribute to filling the void and addressing the needs in the world today, especially in Europe in the field of natural gas and energy."

[bang_gone] 27/1/2023 10:17

Ops + ,Corp , Monday/Tuesday

[johnbuysghost] 27/1/2023 10:16

Great informative posts on here this morning. Thanks to all.

[habshan] 27/1/2023 10:03

Yes I see what you mean, the way his tweet is worded can be implied that a ruling has been given that has gone against Baghdad.

So I guess we wait.

[punter26] 27/1/2023 10:02

Hi Habshan,

I am inclined to agree with Nufc9

Judging by Wahab's tweets that follow his opening statement of the arbitrator ruling , I think its logical to assume that Wahab was implying that the decision favored Baghdad.

[nufc9] 27/1/2023 09:54

At first I read it the same way as you. However on closer inspection...?

“The Int. Commercial Court in Paris has issued an arbitration ruling on claim filed by Baghdad ag. Ankara for the latter allowing #KRG to export oil via IQ-Turkey pipeline w/o consent frm Baghdad per the pipeline agreement.”

He is describing the claim from Baghdad?

Although this then confuses me more:

“Not yet public but ruling was expected to favor Baghdad”

The use of “was” instead of “is”.

Then a later tweet form him was...

“Sudani, who is in Paris, will get asked to stop enforcing the ruling.”

Why would Sudani stop enforcing the ruling if it was decided in Kurdistan’s favour ?

[habshan] 27/1/2023 09:44

Hi Nufc, I read that as the ruling not favouring Baghdad and that the Kurds can use the pipeline without Baghdad's consent.

How do you read it.

[nufc9] 27/1/2023 09:37

Habsham, this tweet can be read both ways.

“ The Int. Commercial Court in Paris has issued an arbitration ruling on claim filed by Baghdad ag. Ankara for the latter allowing #KRG to export oil via IQ-Turkey pipeline w/o consent frm Baghdad per the pipeline agreement. Not yet public but ruling was expected to favor Baghdad”

I’m not sure he’s saying they have favoured with Kurdistan - hope I’m wrong tho

[nestoframpers] 27/1/2023 09:23

maliki will be behind any attempt to undo the Kurds , he wanted ISIS to wipe out Kurdistan IMO. KRI will just carry on what ever ICG does imo GLA

[habshan] 27/1/2023 09:18

Can somebody explain.

Absolutely fantastic news about the Kurds being able to export their oil through the pipeline without needing permission from Baghdad, it'll be a huge relief to the KRG and the IOCs, but how will that "undercut KRG’s gas potential slated for power & export to Turkey to help w Europe’s energy shortage."

How will the Kurds being able to use the oil pipeline cause this:-

"slow down progress of Iraq’s energy sector and independence—read, stop importing Iranian gas and power."

Looking at the sequence of Bilal Wahab's tweets I get the impression that he's talking about two different things. First he talks about the Iran/gas thing and then it's only in his last tweet that he tells us about the Kurds being able to use the oil pipeline.

I think we need to see his earlier tweets to see what he's talking about re. the gas and Iran.

[highlander7] 27/1/2023 09:01

Sounds like just another attempt to intimidate the Kurds in the negotiations. Probably the Iranian faction in the ICG. I cant see how this is in line with the Constitution.

[nufc9] 27/1/2023 08:58

Bilal Wahab, PhD
@BilalWahab
·
5h
Replying to
@BilalWahab

A ruling was delayed several times, reasons including Covid, death of arbitrators, & requests by Ankara and Erbil of Baghdad. Former PMs Abdul Mahdi & Kadhimi obliged and delayed court ruling. Sudani, who is in Paris, will get asked to stop enforcing the ruling.

[punter26] 27/1/2023 08:54

Bilal Wahab, PhD
@BilalWahab
·
5h
Replying to
@BilalWahab

Correction: International Chamber of Commerce (ICC) Court of Arbitration. Not int. Commercial court. My bad.

[highlander7] 27/1/2023 08:51

and this ....

Bilal Wahab, PhD
@BilalWahab
This will impact US policy. This arbitral ruling will further complicate Iraq-KRG relations, which in turn will a) slow down progress of Iraq’s energy sector and independence—read, stop importing Iranian gas and power.

[releasethekraken] 27/1/2023 08:47

HTTPS://twitter.com/111notout1/status/1618884460476502016?s=61&t=vqyD9hnSaYgImep2TksUiw