The completion of Kurdistan’s oil pipeline north through Turkey is understood to now be almost within touching distance.
The first phase is already finished and connects the Taq Taq Field to the Erbil refinery and Kirkuk-Ceyhan export pipeline at Khurmala.
The next stage will link producing fields to Fishkabur on the border and then onto the Turkish coast where the oil will be sold.
The pipeline will have the capacity to transport one million barrels of oil a day and Kurdistan's energy minister Ashti Hawrami claims the final pieces of the jigsaw could be in place by the summer.
The political and economic landscape will be transformed once oil begins to flow through the complete pipeline.
After building the pipeline and agreeing to sell oil via Turkey, in defiance of Baghdad’s wishes, the Kurdistan Regional Government will have greater control of its emerging oil industry.
For the hardy oil explorers that endured years of political uncertainty and made a significant investment into the semi-autonomous region of northern Iraq, there will be greater rewards.
Not only will Kurdistan’s new pipeline open up a new export route, allowing a significant rise in volumes almost immediately, it also provides the reassurance that the oil from the region’s massive discoveries will find a market.
As a result, the risk reward proposition changes dramatically. Not just for investors, but, also for the scores of multinational and state-owned oil firms that are reportedly sitting on the sidelines, waiting for the right time to invest in the KRG.
Most of the remaining prime Kurdistan acreage was snapped up back in 2011.
At this time, US major Exxon was among those taking on projects in Kurdistan. And the controversial move, which pitted the oil giant against Baghdad, ultimately led to the American giant dropping its assets in southern Iraq. In the same 2011 wave, France’s Total and Gazprom of Russia also moved in.
It is likely that any future entrant will have to come via the corporate route. Indeed, a flurry of consolidation last year piqued investors’ interest as they bet on the next sub-scale operator to be taken out.
Analysts believe the addition of a viable export route could spark another, more sustained wave of deals.
This week another US oil major, Chevron, was linked to a move into the region. According to reports, Chevron is being lined up by Turkey for a co-venture alongside Exxon and the KRG.
What is certain, however, is that the pipeline is a big step forward for Kurdistan and the companies that are already pursuing projects there.
London-listed Anglo-Turkish group Genel Energy (LON:GENL) currently trucks the crude produced from the Taq Taq and Tawke fields up through to Turkey. In the coming weeks the company is expected to start sending crude to a second Turkish terminal and this could see sales double to around 60,000 barrels a day.
Once the pipeline is operational output could reach 140,000 barrels in twelve to eighteen months.
Gulf Keystone (LON:GKP), another of London’s oil firms, will no doubt welcome the move too as it moves closer to completing a development plan for its gigantic Shaikan oil discovery – most recently the field was estimated to contain between 8 and 12.4bn barrels of oil.
Meanwhile, London listed explorers Afren (LON:AFR) and Petroceltic (LON:PCI) are also stepping up their respective activities.
The former struck oil in the Simrit 2 well in March, and the discovery well flowed almost 20,000 barrels a day after testing on just six of twelve zones.
Petroceltic, meanwhile, expects drilling to start on its first well in Kurdistan during the second half of this year. The AIM quoted firm has a 16% stake in the venture, which is led by America’s Hess Corp.
Never before has the laying of several kilometres of pipeline been so closely watched or eagerly anticipated.