ERBIL, Kurdistan Region – Gulf Keystone posted its first profit in the Kurdistan Region in 2017 and is anticipating a boost in production at Shaikan oil field.
"We are pleased to have reported a net profit for the year of $14.1 million, compared with a net loss of $17.4 million in 2016,” CEO Jon Ferrier said, announcing their 2017 results.
UK-based Gulf Keystone produced an average 35,298 barrels per day (bopd) at Shaikan for the year, hitting within their target range.
Output has dropped slightly in the first quarter of 2018, down to an average of 31,588 bopd, but the company is optimistic.
“We made considerable commercial progress during the year and into 2018, with the signing of the Shaikan Crude Oil Sales Agreement being a key milestone,” said Ferrier.
That agreement, announced in January, ties sales of Shaikan oil to Brent oil prices. The KRG will purchase Shaikan crude oil at the monthly average Brent oil price, less $22 per barrel to cover transportation costs and a discount for quality. Previously, Gulf Keystone had received $15 million per month as a gross, fixed amount.
“We have now moved to a transparent invoicing mechanism where monthly payments are linked to both the international oil price and actual production from the Shaikan field,” said Ferrier, describing it as a “key milestone.”
“We are confident that once we are able to restart investment into Shaikan we will be able to lift production towards our near-term target of 55,000 bopd, a step towards the full field development,” Ferrier said.
Earlier this year, Norwegian oil and gas operator DNO announced a boost
in its investments in the Kurdistan Region on the back of high profits in 2017.
In February, US-based Chevron announced it was resuming
operations after temporarily suspending them after the independence referendum.
Related: Iraqi federal court hears Baghdad bid to halt KRG oil sales