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, one of the world’s fastest growing major gas markets with expected demand growth of 3% per year until 2020 at least. Turkish gas demand makes the KRI’s gas reserves of far greater strategic importance than oil, 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 the development is now progressing on the ground in Turkey, with BOTAS having begun its tendering process for the construction of the Turkish stretch of the pipeline.
It is a world-class development with a committed government buyer for the gas in place.
The pre-Front End Engineering Design (‘FEED’), carried out by Fluor, and the Gas Development Plan, carried out by Baker Hughes, for both Miran and Bina Bawi are expected to complete in Q1 2017.
Firm 2017 activity is expected to be largely technical and commercial in nature, with a strategy to enhance the value of the KRI gas project. In the event of a successful farm-out, contingent activity could take the form of the environmental and social impact assessment and FEED for the gas treatment and processing facilities, as well as extended well tests and further 3D seismic on the Bina Bawi licence.
Discussions are ongoing with the KRG relating to the finalisation of the PSC amendments and gas lifting agreement, while efforts are also continuing in order to bring in partners to the KRI gas assets through a farm down of the Miran and Bina Bawi licences.