Iraq's Shaikan oil field producing near capacity

The Shaikan oil field in Iraq's semi-autonomous Kurdistan region is producing close to capacity, reflecting firm demand for its crude from local refineries.

Production has edged up to 48,200 b/d this month from 47,900 b/d in July, having averaged just under 39,300 b/d in the first six months of the year, operator Gulf Keystone said today.

Output during January-June was almost 70pc higher than the same period in 2023, proof of how Gulf Keystone has adapted to the 17-month long closure of the export pipeline that links Shaikan and other fields in the region to the Turkish Mediterranean port of Ceyhan. With international export markets off limits to Iraqi Kurdistan producers since March 2023, Gulf Keystone has had to rely on trucking Shaikan's crude to local refineries to stay in business.

Local demand rebounded in February and has remained high since, the firm said. But the company is still having to sell at a steep discount. Shaikan crude currently fetches around $27/bl, which is around a third of the value of Ice front-month Brent.

Gulf Keystone continues to push for the reopening of the pipeline to Turkey and the restart of exports. But in the meantime, "we remain focused on maximising shareholder value from local sales", chief executive Jon Harris said.

The company said it expects local demand for its crude to remain robust in the short term but it has held off from giving a production forecast, as visibility on sales in the longer term is low. It expects Shaikan's output to be reduced by around 26,000 b/d for around three weeks in November as a result of planned upgrades and maintenance.

By James Keates