* Exports to Turkey from Taq Taq field to rise up to 20,000
* Genel says happy to finance new proposed Kurdistan-Turkey
* Taq Taq-Khurmala pipeline seen operational in mid-Feb
By Humeyra Pamuk
ABU DHABI, Jan 9 Trucked exports of crude oil
from Iraqi Kurdistan to Turkey may reach 20,000 barrels per day
(bpd) in a few weeks, the chief executive of Genel Energy
said, in a growing trade that central government in
Baghdad sees as illegal.
The export of crude from the Taq Taq oil field by truck to
Turkey shows the Kurdistan Regional Government's (KRG) growing
frustration with Baghdad as it moves towards greater economic
"The KRG has given us approval to begin trucking relatively
small volumes of crude," Genel CEO Tony Hayward told reporters
on Wednesday, adding that exports of the oil would probably rise
to 10,000-20,000 bpd in the next few weeks.
Taq Taq produces around 100,000 bpd and 35,000 bpd is fed
into the Bazian refinery. Genel Energy has a 45 percent stake in
the field and apart from the direct exports to Turkey, the
majority of the oil is shipped to local refineries.
Hayward, former head of oil major BP, said the
Anglo-Turkish company he now leads was going to be compensated
for the oil shippped to Turkey by the KRG, which will receive
oil products from Turkey in return for the crude.
"Because Kurdistan is short of some particular products,
gasoline mainly, they are sending their oil to Turkey and taking
products in exchange," he said in an interview with Reuters.
The KRG halted exports through the Baghdad-controlled
Iraq-Turkey pipeline last month in a dispute over payments to
oil companies operating in Kurdistan, and officials in Baghdad
say such a unilateraly move to increase the trade of Kurdish oil
could make it even more difficult to reach a deal on payments.
Genel's activities proceed on track nevertheless.
A new 75 km pipeline linking the Taq Taq oilfield to
Khurmala - the entry point to the existing Kirkuk-Ceyhan export
infrastructure - should be up and running soon, Hayward said.
"It'll be mechanically completed by the end of the month and
should be fully operational in mid-February."
If Baghdad and the KRG reach an agreement, the new link
would make exports through the federal pipeline system easier.
Talks over a new proposed pipeline that will link
Kurdistan's oil fields to the Turkish border, which the KRG had
pledged to put in place in 2013, are also ongoing, Hayward said.
"We have said to KRG that we'd be very happy to finance it and
we're still in discussions on how to proceed."
Such a pipeline would cost around $150 million, he said,
adding that Genel, which has $1 billion in cash, would
comfortably finance that. He said the construction could start
in the first half of the year given KRG's target to have it
operational by the end of the year.
NO INTENTION TO SURRENDER
For over a year, Kurdistan has upset Baghdad by signing
deals with oil majors such as Exxon Mobil and Chevron
, providing lucrative production-sharing contracts and
better operating conditions than in Iraq's south.
The KRG says its right to grant contracts to foreign oil
firms is enshrined in the Iraqi constitution, drawn up following
the 2003 invasion that ousted Sunni dictator Saddam Hussein.
Baghdad said last month it would not pay oil firms operating
in Kurdistan because the region had failed to export the volume
of crude it pledged under a deal struck in September.
That agreement stipulated that Kurdistan would pump crude
through the Baghdad-controlled Iraq-Turkey pipeline in return
Hayward said KRG was left frustrated by not getting paid by
Baghdad for the oil it sold and not receiving the oil products
that Kurdistan says it is entitled to and is short of.
"I think they have been very clear they have no intention of
surrendering what they consider to be their right to manage
their own oil and gas. They've also been very clear if they
can't find any accomodation with Baghdad about how to do that
which so far seems to have eluded both parties, they would do
their own thing," he said.
Baghdad transferred an initial sum of 650 billion Iraqi
dinars ($560 million) to the KRG. But a second payment is still
pending for the foreign companies in Kurdistan.