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London-listed Gulf Keystone Petroleum, which operates one of the largest oil discoveries in Kurdistan, is shutting in as of Friday part of its production in the semi-autonomous region of Iraq as exports from Kurdistan from the Turkish port of Ceyhan remain suspended.
Gulf Keystone Petroleum, operator of the Shaikan Field in Kurdistan, said it expects to shut in production processed at Production Facility 1 on Friday, while production flowing into Production Facility 2 will continue into storage tanks at reduced rates for around another two weeks before also being shut-in. The combined storage capacity at PF-1 and PF-2 is around 150,000 barrels, the company said in an update on its operations in Kurdistan.
Earlier this week, Gulf Keystone Petroleum said that its facilities “have storage capacity that allow continued production at a curtailed rate over the coming days after which the Company will suspend production.”
Kurdistan’s crude oil exports – around 400,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted late last week by the federal government of Iraq.
Last week, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq had argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.
Talks between officials from Kurdistan and from the Iraq federal government have failed in recent days, but they are set to continue next week.
Gulf Keystone said in today’s field operations update that “The Company understands that discussions between the Kurdistan Regional Government and the Iraqi Ministry of Oil are ongoing and continues to believe that the suspension of exports will be temporary.”
Earlier this week, the company pumping a quarter of Kurdistan’s crude oil exports, Norway-based DNO ASA, said that it had started an orderly shutdown of its oil fields following the suspension of oil exports.
“It is unfortunate it has come to this given the likely impact of a continuing supply disruption on oil prices and at a fragile time in global financial markets,” DNO’s Executive Chairman Bijan Mossavar-Rahmani said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.