Iraqi oil is so hot right now.
Earlier this month, Genel Energy was acquired by UK-listed Heritage Oil. Now, Genel's partner in Iraq's Kurdistan region, a Swiss operator named Addax Petroleum, is being snapped up by a subsidiary of China's Sinopec Group for $7.2 billion.
Genel and Addax, operating in the Taq Taq license area, began exporting crude to the Turkish port of Ceyhan earlier this month. It seems that was all it took to get would-be acquirers salivating. Perhaps the real turning point was the Iraqi federal government dropping its fierce opposition to these Kurdish production-sharing agreements.
I imagine the above names are largely unfamiliar to Foolish readers. What about folks like ExxonMobil
Indeed they do. But these firms are waiting for next week's federal auction of "technical-service contracts" on six oil fields and two natural gas fields in the country. These deals only provide a fixed payment for improving output from developed fields, so the terms are somewhat less attractive than the autonomous region of Kurdistan's production-sharing contracts.
Still, compared to the demands of deepwater oil exploitation, this is seriously low-hanging fruit, and the big boys will take what they can get. They also must not want to step on federal toes, in what is naturally a highly politically charged atmosphere.
Speaking of the deepwater, I should note that Addax brings much more to the table than its Kurdish connections. The firm also has a strong West African presence, in places like Nigeria and Gabon. This year, Addax kicks off an exploration program in the deepwater Gulf of Guinea that's targeting nearly 1.4 billion barrels of prospective oil resources. Between Sinopec's proposed takeover of Addax and CNOOC Ltd.'s
China's not finished with Iraq, earlier. Watch for aggressive bids by Sinopec and CNOOC as they go toe-to-toe with Eni