Taqa Atrush signs EPC contract with KAR Company to construct feeder pipeline
As operator of the Atrush Block Production Sharing Contract (PSC), Taqa Atrush has entered an Engineering, Procurement and Construction (EPC) contract with KAR Company to construct a feeder pipeline from the Atrush block boundary to the tie-in point with the main Kurdistan export pipeline.
This announcement was made by ShaMaran Petroleum Corp and the construction will begin immediately.
Novation and Fourth Amendment Agreement to the PSC and Atrush Facilitation Agreement also concluded between Taqa, General Exploration Partners, Marathon Oil and the Kurdistan Regional Government.
The fourth PSC Amendment and Atrush Facilitation Agreement had several principal terms. These included Kurdistan Regional Government acquiring a 25% interest in the PSC effective from 7 November 2012, the date of declaration of commerciality.
The other interest holders are Taqa (39.9%), General Exploration Partners (20.1%) and Marathon Oil (15%).
The lengthy commercial discussions associated with this agreement have pushed the commencement of the Atrush Feeder Pipeline to the winter season. Though it is expected to be completed by the first quarter of 2017, the first production from Atrush will be delayed further to the second quarter of 2017.
ShaMaran expects that it would need nearly $20m of additional funding, which it expects to secure by increasing General Exploration Partners's Super Senior Bond through facilities provided in GEP's April 2016 financing arrangement.
This increase will be made with accordance to the April 2016 financing arrangement with General Exploration Partners.
ShaMaran president and CEO Chris Bruijnzeels said: “We are very pleased construction on the Atrush feeder pipeline will now start under the direct operational control of TAQA. The pipeline funding arrangement with the KRG allows us to move forward in executing the construction project.
“We are also pleased that the KRG has finalised their right to acquire a 25% interest in Atrush. With this, two major uncertainties surrounding the Atrush project have been positively resolved.
“The partnership can now fully concentrate on delivering first oil. The accelerated cost recovery scheme, combined with the pipeline funding repayment, should allow for a robust cash flow once production has started.”