June 29, 2009 / 9:03 AM / 10 years ago

UPDATE 2-Dogan's energy unit takes 50% in two Iraq projects

* Has 50% stake in two north Iraq projects

* Will invest $80 million in the projects

* Shares jump 18 percent

(Adds analyst comment, share price)

ISTANBUL, June 29 (Reuters) - The energy unit of Turkish conglomerate Dogan Holding (DOHOL.IS) has become a partner in two oil-exploration projects in northern Iraq, with a 50 percent stake in both, Dogan said on Monday.

The news catapulted Dogan shares up 18 percent to 1.12 lira by 1222 GMT, when the main index .XU100 was up 2.2 percent.

The two exploration projects will entail $80 million in investments, $40 million of which will be made this year, the company said in a statement.

Turkish firms are keen to gain a foothold in the newly emerging northern Iraqi energy sector, and Istanbul-based Genel Enerji is producing oil in the region, which neighbours Turkey.

“Dogan has been seeking new businesses, because their portfolio depends on just fuel distribution and media, which makes it more vulnerable,” said Sinan Goksen, head of research at Ekspres Invest in Istanbul.

“A high-return business like this is welcome.”

Dogan owns Petrol Ofisi PTOFS.IS, Turkey’s largest fuel retailer, with Austria’s OMV (OMVV.VI). Petrol Ofisi shares rose 3.96 percent.

Dogan also controls Dogan Yayin Holding DYHOL.IS, the country’s biggest media group. Its shares climbed 3.92 percent.

Baghdad has described oil deals signed by the Kurdish Regional Government as illegal and anyone investing there is effectively blocked from investing in the rest of Iraq. Kurdish officials have said the objections by the central government’s Oil Ministry are irrelevant.

Dogan said production at a site in Erbil is expected to begin in 2011 if oil is found. Exploration in Khalakan will begin in 2010 at a site where seismic surveys have been conducted this year, it said.

“We don’t know the size of the reserves, how much they will produce ... the costs, where the oil will be sold,” said Serap Mutlu, an analyst at BGC Partners. “These are long-term issues, (and) as the economy recovers, oil prices are likely to rise again, and producing oil in neighbouring countries ... has the potential for big profits.”

The other partners in the projects included Swiss and United Arab Emirate institutional investors, the statement said. The investors are not directly or indirectly invested or involved in the management of Dogan, it said. (Reporting by Thomas Grove, Ayla Jean Yackley and Melis Senderdem, Editing by Mike Nesbit/Will Waterman)

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