Genel confident on Iraqi Kurdistan oil payments despite tensions

In August, Genel and fellow oil producer DNO from Norway struck deals with the KRG to clear outstanding debt and restructure oil export payments. (Reuters)
Updated 19 October 2017
0

Genel confident on Iraqi Kurdistan oil payments despite tensions

Genel Energy said it was confident the semi-autonomous Kurdistan Regional Government (KRG) in Iraq will continue meeting oil export payments despite tensions with the central government following the region’s independence referendum last month.
Genel, one of a handful of foreign oil producers in Iraqi Kurdistan, has seen its share price drop nearly a quarter since the September 25 vote for Kurdish independence from Iraq, which the central government and western powers have opposed.
Iraqi forces have since taken control of some of Kurdistan’s biggest oilfields and operations were interrupted for the first time on Wednesday when oil exports through the Kirkuk-Ceyhan pipeline to Turkey more than halved.
However, Genel said on Thursday its own operations were continuing as normal and that it had not increased security at its sites.
“Our operations continue as usual, staff rotations continue, spare parts are coming in when needed. It’s very much business as usual,” Esa Ikaheimonen, Genel’s newly appointed chief financial officer, told Reuters.
He declined to comment on the status of the Kirkuk-Ceyhan pipeline.
Ikaheimonen said he was confident the KRG would continue meeting payments for oil exports. The payments are Genel’s main source of revenue for oil it produces at the Taq Taq and Tawke oilfields.
In August, Genel and fellow oil producer DNO from Norway struck deals with the KRG to clear outstanding debt and restructure oil export payments.
The companies have since received the first payments under the new structure.
“They’ve (been making payments) flawlessly for two years now and in addition to that they’ve also been extremely cooperative in finding solutions for the settling of problems,” he said.
“That gives us quite a lot of confidence that the desire is there and the commitment is there.”
A slight rise in oil prices, the KRG payments and ongoing revenue from production helped Genel to increase cashflow in the third quarter with unrestricted cash balances at $268 million at the end of September, up from $246 million three months earlier, the company said in a trading update published on Thursday.
This also enabled it to reduce net debt by 13 percent over the quarter to $138 million.
Average output stood at 33,810 barrels per day (bpd) in the quarter, compared with an average of 37,100 bpd in the first half of the year.
Shares in Genel were up 2 percent at 0758 GMT.
“Macro events are likely to remain the major driver of the stock in the near-term,” said analysts at Numis.


Cost of eating out in Saudi Arabia rises at fastest rate in five years

Updated 43 min 37 sec ago
0

Cost of eating out in Saudi Arabia rises at fastest rate in five years

  • August data reveal sharp uptick in prices in hotel and restaurant sector
  • But price increases in other sectors slow leaving overall inflation rate flat

LONDON: The cost of eating out or enjoying a night’s stay at a hotel in Saudi Arabia increased at the fastest rate recorded in five years last month, according to government statistics.
August’s consumer price data show that restaurant and hotel inflation rose to a new high of 8.4 percent year-on-year in August from 7.6 percent year-on-year in July.
Slower price increases in other categories ensured the headline inflation rate for the Kingdom remained relatively flat, with inflation staying at 2.2 percent year-on-year in August, unchanged from the previous month.
Analysts forecast that the Kingdom’s inflation rate will likely pick up again towards the end of the year.
“We still expect it to rise a little over the rest of this year as underlying price pressures pick up,” said Jason Tuvey, senior emerging markets economist at Capital Economics, on Tuesday in a research note.
Inflation in Saudi Arabia peaked earlier this year at 3 percent following the introduction of the new value-added tax on certain goods and the government-imposed price hikes on the cost of energy at the start of 2018.
Consumer prices are expected to drop again in the new year as the impact of the VAT charge lessens, analysts predict.
“The upshot is that we expect that inflation will fall to around 1 percent year-on-year in January 2019,” said Tuvey in a note.
Food inflation - which represents 20 percent of the basket of goods and services used to calculate the growth rates in consumer prices - edged downwards in August to 6.6 percent year-on-year compared to 6.7 percent in July. 

The cost of food had jumped in July, with vegetables in particular becoming more expensive with inflation hitting 8.1 percent year-on-year compared to a decline of 0.8 percent year-on-year recorded in June.