Gulf Keystone cancels Iraq export pipeline tender

30 July 2012

Oil firm re-evaluating 122km pipeline route and will retender scheme later in 2012

The UK-listed Gulf Keystone has cancelled its tender for an estimated $200m crude oil export pipeline in the semi-autonomous Kurdistan region of Iraq.

Prequalified engineering, procurement and construction (EPC) firms were informed by email on 29 July of the cancellation of the pipeline connecting the Shaikan field to Iraq’s northern oil export pipeline to Turkey at Feysh Khabur, according to a source close to the project.

“Due to unforeseen circumstances it has become necessary at this very late stage to re-evaluate the actual routing of the export pipeline. As such we regret to inform you that this tender is now cancelled,” says the email, seen by MEED.

EPC firms had been asked to submit bids for site construction and installation for a 36-inch, 122-kilometre pipeline by 1 July. An updated tender will now be re-issued upon confirmation of the final pipeline route with full route survey details and technical requirements. Gulf Keystone says it expects the retender before the end of September.

Construction was planned to begin in 2013. 

Gulf Keystone has a 51 per cent interest in the Shaikan block, which is situated about 85km to the northwest of Erbil and could contain more than 4 billion barrels of recoverable reserves.

A spokesman for the firm says, “It is quite clear that a field of Shaikan’s magnitude will require a pipeline and we continue preliminary work on the pipeline, pending the confirmation of the final pipeline route within the overall regional pipeline outlook”.

According to an investor presentation given at the firm’s annual general meeting on 19 July in London, Gulf Keystone plans to complete its appraisal of the Shaikan field in 2012, and in 2013, increase production from early well test facilities to 30,000-40,000 barrels a day (b/d).

From 2014, the company hopes to further increase output with an initial development target of 100,000 b/d. The company hopes to bring the field on-stream within three years, with ambitious plans to ramp production up to 500,000 b/d by the end of 2016.

Gulf Keystone is not the only firm planning pipelines in the Kurdish region. In June, the UK’s Petrofac emerged as the frontrunner to win a $298m pipeline construction deal for UK/Turkish joint venture Genel Energy. Genel plans to build a 24-inch, 255km export pipeline from the Taq Taq field to Feysh Khabour.

The deal is yet to be awarded, illustrating the uncertainty surrounding the Iraq’s pipeline plans.

In early June, the Kurdistan Regional Government announced plans for new export pipelines linking the Kurdish region with Turkey, which would bypass Faysh Khabour and the control of the Oil Ministry in Baghdad. The KRG’s first export pipeline would transport 1 million b/d and is planned for completion by January 2014. The plans would make the current pipeline redundant.

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