GENL Genel Energy Plc

By Alex MacDonald

LONDON--Kurdistan plans to export as much as 10 billion cubic meters of natural gas a year to Turkey by 2020 and 20 billion cubic meters of gas annually thereafter, said the natural resources minister for the Kurdistan regional government of Iraq.

Ashti Hawrami told an audience at the Kurdistan-Iraq Oil & Gas Conference here that his regional government is working with companies such as the U.K.'s Genel Energy PLC (GENL.LN) and Spain's Respol SA (REP.MC) to fulfill the details of a natural gas agreement signed with Turkey in 2013.

The government's priority is to first sell gas domestically in order to supply its gas fired power stations and then to meet its the country's industrial gas needs. Kurdistan also wants to export gas in order to generate the revenues needed to continue growing its own economy, a ministry official said.

Kurdistan has the potential to become a major natural gas province, shipping the more environmentally friendly fossil fuel to not only Turkey but Europe as well, Genel's Chairman Tony Hayward, the former CEO of BP PLC (BP), told the same audience.

"The attractions for Turkey are clear, it allows them to diversify away from Russian and Iranian gas, which today accounts for 75% of Turkish gas imports," said Mr. Hayward.

Kurdistan already has more than 850 billion cubic meters of gas resources with potentially as much as five trillion cubic meters of gas to be discovered, Mr. Hayward said. This would equate to more than 50 years' of Turkey's annual gas consumption.

He added that Kurdistan's gas discoveries to date are already sufficient to supply Turkey with 20 billion cubic meters of gas annually, or roughly a third of Turkey's annual gas needs.

An initial investment decision on whether to build gas processing plants is forecast before the end of the year with a view to producing first gas in two to three years' time and then producing more than 20 billion cubic meters of gas in the early to mid 2020s, Mr. Hayward noted.

The investment in the gas processing plants will be guaranteed by proceeds from the natural gas agreement with Turkey, he noted. Initial gas exports will come from Genel's two gas fields, Miran and Bina Bawi, he added.

Natural gas will be "far more strategic than the oil exports and will cement the very special relationship that exists between Turkey and the Kurdistan region," he said.

Kurdistan is also considering the possibility of product swaps with Iran once sanctions are lifted, the Kurdistan official said.

Write to Alex MacDonald at alex.macdonald@wsj.com

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(END) Dow Jones Newswires

December 01, 2015 11:08 ET (16:08 GMT)

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