Genel Energy signs deal with Somaliland involving Taiwan, aiming to drill oil well by 2023

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Interesting timing right after the Africa turkey summit. With the Turkish economy being in dire straits would be interesting to see the push back.

I thought Genel Energy is now a public company listed in LSE. The Turkish owners sold it off to Rothschild investment group and Rothschild floated it and got his money and got out.

Anyway, this deal is perfect as it brings Taiwanese National Oil Company into Somaliland. Hopefully they will struck some success.

With Taiwanese involvement, more than likely the US greenlighted this (which is critical regarding old oil block rights), especially with recent US interest in Somaliland ,looks like certain restraints have been loosened. With Yamamoto officially gone, recent US delegation visit, time will tell.

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I am sure the bulk of the produce will go straight to Taiwan’s market. This guarantees regular predictable oil income.

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Somaliland could easily have 50+ Billion barrels equivalent of oil reserves. Which could place Somaliland in the top 10 Oil reserves in the world.

South Sudan is estimated to have 3.5 billion barrels of oil reserves and produces about 180,000 barrels of oil a day, at dollar value 13 million dollars a day. Of which South Sudan gets around 1/3 or 4 million dollars a day.

http://www.xinhuanet.com/english/2019-10/08/c_138454196.htm

Early history

CPC was founded on 1 June 1946 in Shanghai as Chinese Petroleum Corporation (中國石油) by the government of the Republic of China (ROC, then on Mainland China). With the Kuomintang’s retreat to Taiwan after the Chinese Civil War, CPC was transferred from the Council of Resources to the Ministry of Economic Affairs. The company merged all relevant facilities and companies (Japanese 6th Naval Fuel Depot, Teikoku Oil, Nippon Oil, etc.) in Taiwan. Its main businesses include surveying, extracting, refining, transporting, and selling petroleum. It also produces various chemicals and has retail outlets all over Taiwan. CPC’s fixing of petrol prices helped Taiwan through the 1970s Energy Crisis[citation needed].

Democratization and modern history

Taiwan’s petroleum industry was a CPC monopoly prior to June 1996. However, deregulation allowed the establishment of privately owned and operated petroleum refinery enterprises, leading to Formosa Plastics Group’s launch of Formosa Petrochemical Corporation (台塑石化). In February 2007, the company’s board approved name change to “CPC Corporation Taiwan” and the Chinese name from 中國石油 to 台灣中油.[1] This was to avoid confusion with PetroChina, the China state-run corporation which also has the Chinese name 中國石油, and was part of government efforts to desinicize Taiwanese entities which have “China” their names. However, the Kuomintang political party argued that the name change is not valid because no legislation was passed in the legislature to support it. KMT believes that the approval of the Legislative Yuan is required before a state-owned company can change its name.[2]

In December 2018, production started at the Prelude floating liquefied natural gas facility in Australia, which is the world’s largest floating production structure. The company holds shares alongside investors Shell, Inpex Corporation, and Korea Gas Corporation.[3][4]

In 2019 a Norwegian tanker named Front Altair carrying a cargo of naphtha for CPC Corporation was attacked in the Gulf of Oman. The entire NT$1.07b (US$34m) cargo was lost but the crew escaped unharmed and the cargo was insured. After insurance CPC Corporation incurred direct costs of NT$8m (US$254,000) associated with the incident.[5] The cargo represented two days of Taiwanese consumption but had minimal impacts as the company had 45 day supply in reserve.[6]

In 2020 the first shipment of carbon-neutral liquified-natural gas arrived at CPC’s Yung-An LNG Terminal in Kaohsiung. The shipment was the first in a new program designed to render fuel imports carbon-neutral by buying carbon credits on the global market. The initial purchase from Shell Eastern Trading was for credits certified by the UN’s REDD+ program which supports forests in developing countries.[7]

In 2020 CPC saw the first shipment of crude from the Chadian Oryx field, CPC had first begun exploration in Chad in 2006.[8]

Facilities

In 2019 CPC announced the construction of a third LNG terminal, a facility in Taoyuan expected to be completed by 2023 with an initial capacity of 1 million tonnes per year (tpy).[9]

In 2019 CPC received approval from the Environmental Protection Administration to construct a LNG terminal in Taichung.[10]

Suppliers

CPC Corporation was a historic buyer of Iranian oil and received a sanctions waiver from the United States when they imposed sanctions on Iranian oil imports.[11] Despite receiving a sanctions waver CPC Corporation chose to end its use of Iran as a source country.[12]

In 2018 CPC signed an agreement with American Cheniere Energy to purchase liquefied natural gas for 25 years. Deliveries are set to begin in 2021.[13]

Turns out OPIC is an acronym and it stands for “Overseas Private Investment Corp”.

CPC Corp signs a deal to explore oil area in Somaliland

CPC Corp, Taiwan (CPC, 台灣中油) yesterday said it had signed an agreement with Genel Energy PLC to secure 49 percent working interest of the SL10B13 block in Somaliland.

OPIC Somaliland Corp (OSC) would explore the oilfield and all of OPIC’s capital investment would come from CPC, the Taiwanese firm said.

The state-run refiner declined to disclose financial terms, but CPC spokesman Chang Ray-chung (張瑞宗) said that this is the biggest oilfield exploration deal it has been part of in terms of prospective resources.

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I think after this goes through, the Somaliland gov’t should review the size of the blocks. They are just too big. For example the block SL10B13 is as big as the whole of Kurdistan region. But in Kurdistan the size of a block is 1/1000th of the Somaliland blocks.

HT- Genel Energy stated the barrier to drilling Somaliland’s first oil well in 30 years is over, which will begin by the end of 2023

On Tuesday Genel Energy plc CEO Bill Higgs announced on Q4 2021 results, at earnings conference Call, participated Esa Ikaheimonen – Chief Financial Officer, Paul Weir – Chief Operating Officer & Mike Adams – Technical Director

CEO Higgs, who spoke at the event stated, It is now 20 years since we began operating in the KRI, something that we are making marking this year through our Genel 20 initiative, this will see us expand the ambitions of our already notable social investments in Kurdistan. So watch this space as the year moves on. It clearly had a positive impact with Tawke and Taq Taq having already generated over $20 billion for the Kurdistan Regional Government.

Esa Ikaheimonen, Chief Financial Officer, elaborating further added we are focused on further appraisal at Sarta, much more of that from Mike in a moment. And we are now particularly excited about the recent farm-out on Somaliland, reducing our equity from 100% to 51%. And as a result, we now see a route to drilling an exploration well there, in an area that has real potential. As a reminder, we’ve always said we will drill, but needed other people’s money for it. Now we’ve got it.

Genel Energy’s Technical Director Mike Adams, We have considered Somaliland’s exploration project a hidden gem in our portfolio for quite some time. A view now shared by our new partner, CPC, the state-owned Taiwanese National Oil Company, having formed into the license for a 49% non-operated interest late last year in a deal that saw us recover half of our historical back costs in upfront cash consideration along with an additional cash premium, more than sufficient to fund our share of a well in the block in late 2023, what would be a historic first well in Somaliland for over 30 years.

Mike Adams - Technical Director at Genel Energy | The Org

Technical Director Adams added, to remind you, the block is highly prospective, characterized by rocks analogous to the prolific Yemeni basins and in the event of what would be a play and basin opening discovery, the JV acreage position encompasses that entire basin. We have a strong feeling that the stars are aligning for Somaliland as a whole and this project specifically as some of the natural advantages are maturing in parallel. Our proximity to the deepwater port of Berbera on the Gulf of Aden shipping lane at a time when those facilities and infrastructure are developing at a pace, something we saw firsthand as a management team a couple of weeks back and all against the backdrop of exploration friendly oil prices.

Genel Energy’s Technical Editor Mike Adams who visited Somaliland at the end of last year affirmed, on 20th Dec 2021 during his trip “Somaliland is a highly-prospective and largely unexplored region, with a compelling technical case for the drilling of a well. Oil seeps confirm a working petroleum system, and one prospect alone could target over half a billion barrels…

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Deloitte report on Oil and Gas review in the Iraqi Kurdistan Region – Q1 and Q2 of 2021

The KRG has published the reports containing verified statistics covering the Kurdistan Region’s oil exports, consumption and revenues for covering period 1 January 2021 to 30 June 2021.

During the first half of 2021, the KRG exported 77.35 million barrels through Kurdistan Export Pipeline. In addition, 3.95 million barrels were allocated to local refineries. Of the exported crude oil, 76.869 million barrels were lifted by the buyers from Ceyhan Export Terminal, at an average price of 53.446 $/bbl. The KRG has generated revenues of USD 4.1 billion from crude oil export sales during the first half of 2021. After making payments to oil producers, pipeline operators, and repayments to the buyers, the KRG retained net revenues from crude oil sales of US$ 1.737 billion.

The KRG is has engaged in discussions with international buyers and oil producers in continuing its efforts to maximize sales prices and reduce production costs to maximize value for the people of Kurdistan.

Transparency is central to the cabinet’s agenda. The report, available in Kurdish, English and Arabic, provides a quarterly analysis of oil export information and average prices which have been independently reviewed and verified by Deloitte.

The KRG acknowledges the positive feedback received from domestic and international stakeholders. The council reiterates its commitment to the people of Kurdistan that Deloitte will continue to independently review and verify the statistics of the Kurdistan Region’s oil and gas sector.

A frequently asked questions handbook (also available in Kurdish, English and Arabic) has also been developed to help readers to understand the report’s contents.

Kurdistan exported close 76m barrels of oil in the first 6 months of 2021, with net income to the KRG os $1.7 billion. Or when annualised 150m barrels and $3.5 billion dollars.

That is about 450,000 barrels a day.

If Somaliland only produced in the first year 50,000 barrels a day, then that will be equivalent to 10% of KRG production. or 350 m dollars of income into the Gov’t coffers.

Not a bad start.

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