Majority state-owned UAE national oil company has announced plans to invest some $1.2 billion in the development of a key oil and gas block in the Kurdistan region of Iraq.
Granted approval from the Kurdistan Regional Government (KRG) late last year, Abu Dhabi National Energy Company (Taqa) plans to invest more than $300 million in the first phase of the development of the Atrush oil and gas block, with overall investment expected to be around $1.2 billion.
According to Taqa, the first phase of the project is expected to launch in early 2015 with first production at 30,000 barrels of oil per day.
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The second phase of the project, which foresees a doubling of production to 60,000 bpd, along with the production of gas for the domestic market, has not yet been granted final approval by the KRG.
Overall, the project foresees production of between 100,000-120,000 bopd after four years.
Taqa, majority owned by the UAE government, holds a 39.9% share in the project consortium, while Kurdish ShaMaran Petroleum Corp. holds 20.1%, US-based Marathon Oil Corp. holds 15% and the KRG holds 25%.
The UAE has pursued business in Kurdistan, and with the KRG, rather ambitiously in recent years, including in the oil and gas and construction sectors. A number of UAE-based companies are now operating there, most notably Dana as, Rotana and Majid Al Futtaim.
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Unilateral oil and gas dealings with the KRG are a point of contention with the Iraqi central authorities in Baghdad, who claim such deals are illegal as long as they bypass Baghdad.
Kurdistan has already begun independently exporting crude oil directly to Turkey, but for now, in an apparent nod to Baghdad, that crude won’t go beyond Turkey’s Ceyhan export hub to international markets until Turkey reaches a deal with the Iraqi central authorities.
Earlier this month, Turkish energy officials said oil started flowing directly from Kurdistan and that the oil would be kept in storage at the country's Ceyhan export hub and that he hoped that Ankara would reach a deal with Baghdad before the end of January.
By. Charles Kennedy of Oilprice.com