27th Mar 2023 17:34
(Alliance News) - London-listed Gulf Keystone Petroleum Ltd and Genel Energy PLC suffered share price falls on Monday after Iraq won a landmark arbitration case, prompting Turkey to close a pipeline.
Gulf Keystone shares ended 16% lower at 145.80 pence each in London on Monday. Genel Energy fell 6.3% to 110.00p.
Gulf Keystone and Genel noted that Turkey closed the Iraq-Turkey pipeline after the International Chamber of Commerce ruled in favour of Baghdad. The arbitration case centred on the rights over Kurdistan's oil exports.
Iraq just under a decade ago claimed exclusive rights over Kurdish oil exports. However, the regional government continued to export oil through Turkey.
Gulf Keystone said its "facilities have storage capacity that allow continued production at a curtailed rate over the coming days after which the company will suspend production", adding that it is not clear when export operations will resume.
Genel Energy, meanwhile, said that it continues to produce oil into storage facilities.
Analysts at Peel Hunt commented: "Ultimately, it appears Iraq's influence and control over Kurdish oil affairs is increasing. However, it is important to note that Iraq also sells and exports 75,000 barrels of oil per day through the pipeline, so it also has an interest in getting it back up and running in a timely manner."
Iraq's oil ministry said that the Paris arbitration tribunal had ruled that Baghdad's State Oil Marketing Organization "is the only entity authorised to manage exports".
The Kurdistan government sees Baghdad as trying to profit from the region's resources, while the Iraqi government argues it should enjoy sovereign control over all of the country's oil production.
"While political risk remains, the [Kurdistan Regional Government]-exposed companies successfully strengthened their respective balance sheets over 2022 and should be able to easily weather a short period of disruption," analysts at SP Angel commented.
By Eric Cunha, Alliance News news editor
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