MOL Group announced Tuesday that it has scaled back investment in the Akri-Bijeel Block, located in the Kurdistan Region of Iraq, due to payment issues associated with the block and area’s geological complexity.
As previously announced in the company’s financial report in the fourth quarter of 2014, the Bijell-4, Bijell-6 appraisal wells in the region did not encounter movable hydrocarbons. Additionally, the latest delineation wells in the Bijell and Bakrman areas of the block have further confirmed greater geological complexity, according to MOL. Uncertainties around the regular payment cycles for export sales have also shaped the company’s decision to minimize investment in the block.
The expected investment level for the remainder of 2015 is below $10 million, although MOL maintains the group level $1.3 billion annual capex target. The company has also embarked on a comprehensive efficiency improvement program on its Kurdistan operation with the purpose of optimizing general and administrative expenses. Despite scaling back its investment in the region, MOL Group intends to maintain the operated Akri-Bijeel license and optimize production from the Bijell-1B well, which is expected to produce around 2,200 barrels of oil equivalent per day in 2015.
International energy companies operating in the Kurdistan Region of Iraq, such as Gulf Keystone Petroleum and Genel Energy, have been affected by a lack of payment for their services. Gulf announced on August 27, 2015 that it was owed $283 million as of June 30, 2015 and Genel reported that it was owed $233 million on March 5, 2015. At the end of August 2015, the Kurdistan Regional Council for Oil & Gas Affairs approved the allocation of $75-$100 million of the revenue from the Kurdistan Regional Government’s direct crude oil sales as payment for exporting international oil companies.
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