Iraq News - Local News - Baghdadpost

Iraq oil producers caught up in Iran crisis


The first weeks of 2020 has had enough action for any airport thriller: the assassination of a military leader on 3 January, one missile attack that killed no one on purpose and another that killed 176 people apparently by accident.

The energy markets reacted with a shrug, however. Brent crude jumped to $70 (£54) a barrel in the immediate aftermath but fell back just a few days later. WTI crude – indicative of US sentiment – hardly jumped in the first place.  

In the middle of all this is Iraq. The Iraqi prime minister and parliament has pushed for US troops to leave the country, while the Kurdish government says Islamic State could re-establish itself if Donald Trump decreases his military’s presence in the country. Several London companies are directly exposed to the region. 

Gulf Keystone Petroleum (GKP) – down 8 per cent after the assassination – has been steadily building production and sales at the Shaikan project, and has turned its fortunes around following a share consolidation in 2016.


It has returned to paying dividends and announced a further share buyback programme last month. Gulf Keystone has an office in Erbil and its Shaikan field is about 60km to the north, but said in a statement that operations “continue safely and have not been affected”. The company is in the midst of a major expansion to production, moving from 32,000 barrels of oil per day (bopd) gross in 2019 to 55,000 bopd by the end of September this year.

Genel Energy (GENL) – down 7 per cent after the drone strike – is also active in Kurdistan, with a 25 per cent share of the Tawke PSC project near the Turkey-Iraq border. The operator and 75 per cent owner of Tawke said on Tuesday that production was up 10 per cent on the year before, to 124,000 bopd gross. Like Gulf Keystone, the company said operations were continuing as normal.  

RBC Capital Markets analyst Al Stanton said that at the very least Kurdistan-focused companies will see their cost of capital go up, and in a report this week anticipated a “slower pace of activity to reflect the escalating geopolitical uncertainties” . One risk for investors unrelated to the US/Iran snafu is payment by the Kurdistan Regional Government – both Genel and Gulf Keystone got their August and September cash months late.