Anglo-Turkish oil giant seeks N Iraq domination
ISTANBUL - Hürriyet Daily News | 9/8/2011 12:00:00 AM | İPEK YEZDANİ - firstname.lastname@example.org
A reinvigorated Genel Energy, which will be led by the former CEO of BP, looks to become one of the biggest oil companies operating in northern Iraq. Speaking to the Hürriyet Daily News, Tony Hayward says it’s a good time to invest in the region, while partner Mehmet Sepil says the firm could invest in Libya, too
A new Anglo-Turkish partnership that emerged with the merger of U.K. company Vallares and Turkish businessman Mehmet Emin Karamehmet’s Genel Energy has revealed its plans to dominate the vast reserves of oil in the Kurdish autonomous region of northern Iraq. The partnership, led by ex-BP CEO Tony Hayward, also plans to invest elsewhere in the Middle East, once the dust of the Arab Spring settles.
Responding to questions from the Hürriyet Daily News on the sidelines of a press meeting in Istanbul, Hayward said Vallares would deal with the regional Kurdish administration, not Baghdad. Eventually, the Kurdish region will have “a significant say” in what is going to be finally approved in Iraq’s expected hydrocarbons law, he said. Mehmet Sepil, the CEO of Genel Energy International, said the firm expected the law to be approved in Baghdad by the start of next year.
The complex partnership will be completed through an all-share reverse-takeover in which Vallares will issue new shares worth $2.1 billion to acquire 100 percent of Genel, giving Vallares and Genel’s current owners equal stakes in the combined business.
“The only approval we need is from the Kurdistan Regional Government, and we expect that approval to come before the end of September,” Hayward told the Daily News on Thursday. “All of the indications in Kurdistan show that things are only going to get better. I think this is a good time to invest in the region.”
Sepil said the new company would be listed on the London Stock Exchange in around four weeks and that it would offer 50 percent of its shares to the public. “In the end, the company will rank among the top 100 companies in the U.K.,” Sepil said.
Sepil said he would have a stake of 14 percent in the new company, down from his current 29 percent, while Karamehmet’s stake will fall from 56 percent to 28.
Pragmatic realism in region
Commenting on possible risks regarding stability in northern Iraq, Hayward spoke of a “pragmatic realism” that has emerged between the regional government and Baghdad. “This means [one] can invest,” he said. “[The two governments] have agreed to revenue-sharing mechanisms. Payments are being received and I think all indicators show that things are only going to get better. There will be some bumps in the road, but the train and its direction are clear.”
He also said when the oil law dispute is resolved, the Kurdish administration “will have a significant say in what is finally approved.”
“[Kurds] have a significant standing both in the Iraqi Cabinet and in parliament,” he told the Daily News. “This law is important for all foreign investors in Iraq, not only for those who are investing in the region.”
Northern Iraq has attracted more than $10 billion in energy investments from more than 40 companies from 17 countries. Sepil said he expected similar consolidations in northern Iraq, adding that Genel, whose headquarters will be Ankara, aims to be among the few companies left in northern Iraq at the end of the next wave of consolidations.
Noting the seismic political shift in the Middle East, Sepil said Genel would like to invest in other locations, especially in North Africa, including Libya, after stability is established.
After the press meeting in Istanbul, Hayward and Sepil headed to Arbil in northern Iraq.