Balancing geological potential and political risk

Tony Hayward: While it is difficult for us to speculate on this, we believe that the pipeline will be a positive political benefit, allowing for increased exports of oil from the Kurdistan Region of Iraq with regular and stable payments that will benefit Iraq as a whole.

James Stafford: How much oil is reaching Turkey now? Can you take us through the transport route and the costs?

Tony Hayward: At present we are exporting around 30,000-40,000 bopd a day by truck from Taq Taq to Mersin, on the Mediterranean coast in Turkey, where it is sold on the international market. Contractors are receiving full entitlement for the barrels sold.

James Stafford: What can we expect from new exploration in Kurdistan, and what is the average hit rate for exploration?

Tony Hayward: Hopefully more of the same. High impact exploration drilling is continuing in the KRI, and planned wells are targeting around 1bn boe of gross unrisked resources. We also still have work to do to fully assess our recent discoveries, and so the full potential of the region has yet to be evaluated. We remain very excited about the potential volumes in place. Results from Chia Surkh 11 and Taq Taq Deep are expected in Q4, while Miran Deep will spud in 2014. With the African portfolio taken into account, we are targeting over 4bn boe.

We've enjoyed a great run of exploration success in Kurdistan this year, with three successes from three wells adding in excess of 50% to our net contingent resources. While this isn't typical, our hit rate in Kurdistan has been very pleasing and due in no small part to the extensive preparatory work conducted by our technical teams ahead of drilling.

James Stafford: There are plenty of junior oil companies eyeing Kurdistan right now. What does an E&P company need to know about operating in Kurdistan?

Tony Hayward: We have found Kurdistan to be a very good place to operate. As with all places, you should ensure good working relationships with the local government and communities. As one of the first movers in the KRI we were in a very fortunate position – such has been the success in the region the majors have unsurprisingly now got involved, albeit focusing on exploration and appraisal opportunities so far

James Stafford: Genel is no stranger to high-risk venues, and that brings us to Somaliland. What's the political risk of exploring in a country that broke away from Somalia 20 years ago but still is not recognized internationally?

Tony Hayward: As an independent oil company I'm afraid the potential for now finding acreage with a very low technical and political risk is nigh on impossible – you have to have one or the other. Kurdistan was a low technical risk, and we were happy with the level of political risk – and we believe the momentum over the last 18 months has proven us correct.

Somaliland is geologically hugely exciting, and so the risk is on the political side.

James Stafford: Why Somaliland? How explored is Somaliland, and what do you expect to find—and when?