Gulf Keystone Petroleum said on Friday plans to increase production from its Shaikan oilfield in Iraqi Kurdistan remained on track despite the escalating threat from Jihadist insurgents in Iraq.
The oilfield, located north of Kirkuk, is currently producing at a rate of 16,000 barrels per day from three wells and output is expected to rise to 20,000 bpd by the end of the month, with plans to boost capacity to 40,000 bpd by year-end.
“Our operations in the Kurdistan Region of Iraq are progressing in line with our previous guidance, whilst we remain alert to the current security situation in Iraq, which has recently escalated outside the Kurdistan region,” said chief executive Todd Kozel.
Kurdish forces have now taken control of Kirkuk in northern Iraq, after government forces fled, in a move to defend the key oil city from Jihadist fighters who are now advancing on Baghdad after seizing two more towns.
The region hosts the key Kirkuk oilfield and is also the starting point of Iraq’s main crude export pipeline to the Turkish port of Ceyhan, though oil flows along the route remain halted due to damage to the line.
The 3000 to 5000 fighters from the Islamic State in Iraq and the Levant (ISIS) were now said to be in control of another two towns in Diyala province in the east, having already seized Mosul and Tikrit, and were within 100 kilometres of Baghdad on Friday.
The insurgents have also surrounded the country’s largest refinery in the northen town of Baiji that supplies Baghdad.
Another Kurdistan producer, DNO, saw its Oslo-listed shares drop more than 5% this week on investor fears of the potential risk to its flagship Tawke oilfield – located only 150 kilometres north-west of Mosul – where it is looking to double production capacity to 200,000 bpd by year-end.
The insurgents have threatened to push to the capital and regions farther south - where other key oilfields are located - dominated by Iraq’s Shia Muslim majority whom they regard as “infidels”.
The International Energy Agency (IEA) said in its latest oil market report that the crisis “might not, for now, if the conflict does not spread further, put additional Iraqi oil supplies immediately at risk”.
The agency added though the violence is likely to push farther back a return of the Kirkuk-Ceyhan pipeline.
Turkish Energy Minister Taner Yildiz said on Friday the escalation of fighting in Iraq does not constitute a threat to Turkey's oil supply security, Reuters reported.
Iran was reported by the Wall Street Journal to have sent two batallions of the elite al-Quds forces of its Revolutionary Guard to help the Iraqi government, while US President Barack Obama has not ruled out military intervention amid reports of atrocities including summary executions of civilians by the insurgents.