Oil and cash flow: the Kurds' conundrum

Friday, July 25, 2014
from Mars Omega LLP

Some ten days ago, the Kurdistan Regional Government (KRG) were reported to have sent Peshmerga units into the Bai Hassan and Kirkuk oil fields - formerly under the control of the North Oil Company (NOC) - and both of which are in areas of disputed territory.

The KRG subsequently told NOC's workers they had a choice: either work for the KRG, or leave.

The reason that the fields have been taken is pretty obvious - the KRG needs revenue and the only way to generate the right amount of homegrown cash is by selling oil.

The two fields now under control of the Peshmerga can - in theory - add some 500K bpd to the KRG's production profile and with oil prices north of $100 per barrel, that is an awful lot of money.

Houston, we have a problem

Actually, Irbil may have quite a few.

First: bringing crude oil to the world's markets will need a better Kurdish downstream infrastructure; second: there is the critical issue of physical security to consider; third: someone has actually to buy it.

libkhttp://www.oilvoice.com/n/Oil_and_cash_flow_the_Kurds_conundrum/2d596db7051a.aspx#gsc.tab=0