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Kurdistan Taq Taq oil exports rise ahead of Sept deadline
September 6, 2012 / 4:41 PM / in 5 years

Kurdistan Taq Taq oil exports rise ahead of Sept deadline

TAQ TAQ, Iraq, Sept 6 (Reuters) - On August 7, Joe Stein - head of operations at Iraqi Kurdistan’s Taq Taq oilfield - was told to start exports immediately at 40,000 barrels per day.

On Sept 15, he may get the call to switch them off.

That is the deadline set by Iraq’s autonomous Kurdistan government, in the latest passage in its long-running feud with Baghdad’s central government over oil payments.

“My duty is to march. When they say march, I march,” Stein said. “Our mission is to have production capacity to meet whatever sales quota we’re given by the Kurdistan Regional Government (KRG).”

That much they accomplished. This 12-km field now pumps 105,000 bpd of “champagne”-quality crude - very light at 48 degrees API - with 55,000 bpd delivered by tanker truck to Khurmala for export into the central government’s Iraq-Turkey pipeline.

Around 35,000 bpd is trucked to the nearby Bazian refinery and the remainder stored.

Stein said exports had been adjusted higher to 55,000 bpd in order to meet the KRG’s export commitment. And if the order were given, exports from Kurdistan’s biggest producer could climb to around 70,000 bpd.

For now, Kurdistan’s oilfields of Taq Taq, Tawke and Khurmala are delivering roughly 120,000 bpd between them.

Straddling rough and rocky terrain, Taq Taq’s 12 wells are still able to run smoothly despite the stop-start flow of Kurdistan’s exports, last halted from April to August due to political infighting with Baghdad.

Kurdistan and Iraq’s central government are locked in a battle over oil rights. Baghdad says it has the right to export oil. But Kurdistan has signed exploration oil deals with foreign companies, contracts Baghdad says are illegal.

Kurdistan halted exports in April over payments from Baghdad to companies working in the region. It restarted them, but warned it would cut shipments by mid-September if there were no progress on payments.

‘TURNING ON THE FAWCET’

Inevitably, when exports stop, some wells have to be shut down. But Stein said up to 80,000 bpd of the field’s full 105,000 bpd capacity could be kept running through local sales and deliveries to the Bazian refinery.

“This is a very easy field to operate. It’s almost like turning on your fawcet,” said the Texan operations manager. “It flows naturally under its own pressure.”

And if exports continue, the operation will be made simpler and cheaper come October thanks to the installation of a new 75-km pipeline linking Taq Taq to the Khurmala dome, the northernmost part of the giant Kirkuk oilfield.

Privately-owned KAR Group, based in Arbil, is building the 150,000 bpd pipeline, which is due to be completed by the end of September and ready for exports by October.

On Tuesday, 90,000 barrels of crude was loaded onto 413 tankers with more than half of them making the 135-km journey to Khurmala to deliver exports.

When production capacity reaches 150,000 bpd - a target expected to be hit by the end of next year - up to 700 tankers would be needed to transport the volume.

Initial plans to build a pipeline from Taq Taq, where Anglo-Turkish Genel Energy has a controlling stake, to near the Turkish border, are on hold.

Flows from Taq Taq, which started pumping in 2009, are due to rise higher still by the end of next year as production and tanker-loading facilities are expanded to 150,000 bpd.

“If we can meet that (target), we’ll really be doing well,” Stein said.

He said the expanded tanker loading facilities would provide an ‘insurance policy’ if there were a pipeline disruption.

The field, which has up to 800 million barrels of oil in place could have yet more potential. “We’re looking for a reservoir underneath,” said Stein, adding that a deep well test would be done on the field later this year. (Editing by Patrick Markey and Keiron Henderson)

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