The development of the world-class Miran and Bina Bawi fields is set to unlock significant value for both Genel and the KRG, assisting the Kurdistan Regional Government in satisfying domestic gas demand and its obligations under the KRG-Turkey Gas Sales Agreement. 

The development of the fields is a unique opportunity, and promises to deliver significant value for shareholders. The fields are 300 km from Turkey, and they provide Turkey with the opportunity of materially reducing their gas import costs.

Turkey currently consumes approximately 50 bcma of gas, of which more than half is provided by Russia. With the KRG set to provide 20 bcma, this gas will help to diversify, and indeed form the baseload of Turkish supply, at a cheaper price than all current imports.

The project is underpinned by the KRI-Turkey Gas Sales Agreement, and is a world-class resource with a committed government buyer for the gas in place.

In February 2017, the Company announced that it had finalised Amended and Restated Production Sharing Contacts and Gas Lifting Agreements for the Miran and Bina Bawi fields. This was an important milestone, allowing Genel to focus on the next step of concluding negotiations with potential partners, which will be the catalyst for pre-development activity to start in earnest in order to move the KRI gas project towards FID.

The Gas Lifting Agreements (‘GLAs’) signed for Miran and Bina Bawi in February 2017 contained a number of conditions precedent (‘CPs’). If these CPs are not satisfied or waived by February 2018 the KRG has a right to terminate the GLAs. In the event of termination, and a subsequent failure to conclude new gas lifting agreements within a one year period, the KRG can also terminate the Miran and Bina Bawi PSCs. During the three year period following such a termination, Genel would have a right of first refusal to participate in the development of the Miran and Bina Bawi gas fields with a 49% working interest on the same terms offered to any third party.

Since signature of the GLAs, Genel has continued its efforts to maximise the value of the assets, including negotiations with potential farm-in partners for the upstream development of the Miran and Bina Bawi gas fields.

The prospect of enhanced future cash flows under the Receivable Settlement Agreement has created an opportunity for further appraisal and development activity at the Miran and Bina Bawi fields, which may include an extended well test and 3D seismic on Bina Bawi, and early development of the Miran oil resource. The Company believes this activity, which has yet to be finalised and is dependent on a number of factors including continuity of payments, can be implemented while maintaining financial flexibility and a strong balance sheet, and will deliver the best possible shareholder value and backdrop for the farm-out process.

The updated competent person's reports for Miran and Bina Bawi are on track to complete by the end of 2017. During Q3, it was announced that the KRG had negotiated Rosneft’s participation in the funding of the construction of the KRI natural gas pipeline infrastructure

The development of the Miran and Bina Bawi assets has the potential to be transformational for Genel, and the Company is focused on demonstrating the value proposition to the industry and market. Genel has been central to the Kurdistan Region of Iraq’s development as an oil province, and we now look forward to playing the same role in the development of gas exports which will provide a huge boost to the KRG’s economy.