On the pipes

Kurdistan Region of Iraq

TOGY talks to KAR Group president Baz Karim about the company’s operational plans and the prospects for the Kurdistan Region of Iraq’s market as the company prepares to commission its refinery expansion project and power plant expansion. KAR Group is the largest local integrated oil company in the Kurdistan Region

TOGY talks to KAR Group president Baz Karim about the company’s operational plans and the prospects for the Kurdistan Region of Iraq’s market as the company prepares to commission its refinery expansion project and power plant expansion. KAR Group is the largest local integrated oil company in the Kurdistan Region.

What is your assessment of the operating environment in the Kurdistan Region of Iraq? 
It is amazing how dramatically the cost of services has shifted. Now is a great time for investment. But it is not easy at these oil prices. International finance has paused in the region until it sees how things shake out with the oil price. The government is having difficult financial times, but it has started to prioritise payments to the oil and gas industry. I cannot tell you that the operating environment is better than ever, but I can tell you the investment opportunities and the cost of doing business are much better than the high peak we achieved so quickly.

How do you view the risk profile of the Kurdistan Region in 2016?
We all live by the price of oil. It will dictate economic growth. It will dictate political stability. It will dictate foreign investment. It will dictate access to credit. We hope that the oil price has hit the bottom and will now steadily rise. If not, it will be a tough year. But don’t take “tough” as a reason to quit. We fight during tough times. We find ways. We will continue to focus on the oil and gas industry in Kurdistan.

To what extent has the Ministry of Natural Resources’ intention to start paying companies for their oil exports changed the company’s outlook for 2016? 
We all need and respect contracts. It’s how we measure the economic investment. It’s how we protect our rights. It’s how we map our business paths. All oil and gas companies have shown flexibility, and we are excited that the flexible period is now transitioning back to a contractual period. This will allow us all to understand, model and progress based on the set rules that we jointly signed with the government.

How has the past year transformed the company and its operations? How has it affected the outlook of the Kurdistan Region? 
It has been tough on our team. We are 99% local. Their families are affected by the economy. Attitudes are affected by the uncertainty. We have become leaner and more efficient. We are doing more with less. That is the way one survives in business. We’ve always seen it in business cycles around the world. All the while, we have expanded production.

Given the company’s experience with gas pipelines and gas treatment units, how can KAR assist the Kurdistan Government in its aim to develop its natural gas resources and accompanying infrastructure?
We have a plant at Khurmala, with a daily capacity of 2.83 mcm (100 mcf), so we are in the gas business. As further gas business develops in the Kurdistan Region, we will watch it closely and team up with investors when it makes commercial sense. We have proven ourselves on pipelines – we like that sector. And we hope the economic model for the gas pipeline is investor friendly. If so, of course we will look at it.Our focus is on Kurdistan. We live here. It’s our homeland. It has undergone a great deal of progress and has a very interesting near- and medium-term coming up. For that reason, this will remain our focus market.

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