What is going on with Gulf Keystone Petroleum in Iraqi Kurdistan?

What is going on with Gulf Keystone Petroleum in Kurdistan — Iraqi Kurdistan oil minister Ashti Hawrami. Photo: Courtesy/Atlantic Council

Rizgar Khoshnaw | Exclusive to iKurd.net

The more I read/research about oil deals and International Oil Companies (IOC) doing business in Kurdistan, the more confused/puzzled I become. Some things just do not add up and makes absolutely no sense at all.

There is such a huge web in oil dealings in Kurdistan that I can not even begin to discuss more than a tiny portion of it as it is extremely complicated. I am sure this was done by design and the chief architect is the Kurdistan Regional Government (KRG) oil minister; Ashti Hawrami.

The huge and complicated web I am referring to covers companies/people/politicians in the UK, US, Turkey, Kurdistan, Saudi Arabia, UAE and many others, but we do not need to talk about that just yet!

In the past few months, I have written numerous articles about this subject and I have covered many different IOCs and have questioned the KRG as well as the IOCs in how they conduct business in Kurdistan.

I strongly feel that not only there are unqualified, unprofessional and dishonest people dealing with this issue on both sides; the KRG and the IOCs, but there is more than what we are seeing on the surface. Of course this is a recipe for disaster whenever you have such combination.

There are many IOCs that I would like to discuss, but for now I am only going to cover Gulf Keystone Petroleum (GKP) because I see this company as most interesting/intriguing with unprecedented potential for upside. Closely studying their operations and financials, such as huge accounts receivables, it would seem that the stock of GKP should be trading at a much higher level than they currently are and have been in the past.

Company stock is down 99% and this just makes no sense at all, if indeed all sides are being honest and transparent with each other and the public. But, I honestly do not think they (KRG and GKP) are operating on the “same page” as I see it.

Since I had written an article about GKP last year, they have taken very positive steps to improve their operations and managements. But, with them as well as other IOCs in Kurdistan, I truly feel that there is serious pressure being placed on them by Hawrami on different levels. From what I am reading in many news articles and researching this subject, I gathered that Hawrami is changing the rules and re-writing “some” documents that in turn has hurt GKP, and other IOCs, and their operations.

If GKP is left alone and allowed to work in an honest manner, and is paid what is owed to them, we can see their stock trade at a much higher level as they were in February 2012! If Hawrami keeps on pressuring them to do things that they do not and re-write the rules with them, GKP could easily go bankrupt and close their operations and this will spell disaster for Kurdistan in many ways.

After researching many news articles on many website that deal with international oil issue, as well as GKP web site, I read that Ashti Hawrami had forced GKP to give up one of their blocks near Dohuk (Sheikh Adi- PSC). And, GKP were prevented from selling their interest in the block to cover their costs that they had already incurred.

This was done after GKP had spent hundreds of millions to develop the block! Also, if GKP was relinquish it, then they would be compensated $350 Million that is owed to them, but not only they did not get paid, but they were charged $10 Million instead. This issue is much more complicated, but I tried my best to simplify it. This clearly shows that Hawrami is re-writing the rules and this is a very wrong way to conduct business.

Ashti Hawrami with Nadhim Zahawi — Iraqi Kurdistan oil minister Ashti Hawrami (L) with millionaire British-Kurdish MP Nadhim Zahawi. Photo: Courtesy of CWC group/flickr

I truly think that GKP is limited to what they can do on their own without Hawrami being involved in their every day operations exerting unnecessary pressure on them.

For example, How did a MP from The UK Parliament, Nadhim Zahawi, end up been placed on the payroll of GKP for an exuberant amount of over $500,000 a year for “working” 7 hours a month!! That is right, it is 7 hours a month, NOT a day! See links below.

Zahawi is an Iraqi Kurd by origin with “close” contacts with KRG personnel at the oil ministry. Why is that, and who decided, to place this guy on such huge salary for doing absolutely nothing? There is no way in hell that GKP would make such stupid move! This lead me to believe that it is Hawrami’s doing once again since Zahawi has a close relationship with many KRG personnel, including Hawrami. Did Hawrami “suggest” to GKP that they must employ Nadhim Zahawi?

And, was it not Nadhim Zahawi on the board of Afren oil company, among many other companies, that was operating in Kurdistan that went bankrupt last summer? What a great adviser this guy is!! See links below about other companies and corrupt activities Zahawi has been involved in the UK and Kurdistan. This guy has such a bad track record and yet he is “advising” oil companies in Kurdistan?

As of today, GKP has an extremely low market capitalization (a measly $54 Million) and that is extremely low for an oil company that has proven reserves in the billions of barrel of oil in their assigned blocks. And only three years ago the market cap for GKP was ~ $7 Billion!! And it is a known fact that extracting oil in Kurdistan is one of the lowest in the world; only $5 a barrel compare to around $40 in the US and other countries. This meas that IOCs should be profiting billions of dollars a year in their Kurdistan operation, but as well all know, they are not, and on the contrary, they are suffering financially and in desperate need of urgent cash infusion.

Speaking of Ashti Hawrami, does anyone wonder where in the hell he came up with $8 Million to purchase a mansion on Henley-on-Thames (see link below) villa out side of London with a salary of $10K a month? There is only one way that anyone with such salary, and have been on the job for only two years when he purchased this villa, is by been involved in corruption! NO way in hell anyone can convince me otherwise.

No one can accumulate $8 Million on a salary of $10K a month for being on the job for two years- it is just basic math!

Furthermore, Hawrami has been under investigation (for insider’s trading and corruption) in Iraq, the UK and South Korea- see link(s) below. I wonder if Hawrami understands what it means to be involved in insiders’ trading of oil stocks of companies that he himself had awarded them the contracts? Such activities will do serious damage to Kurdistan and its reputation now and in the future. If this turns out to be true, then not only he will suffer, but all of Kurdistan will as well. Simply put, one man on his own can bring down Kurdistan with his corrupt dealings.

It would seem that Hawrami does not care if he is hurting anyone, such as the investors, as long as he is controlling everything and benefiting from his Machiavellian actions. Investors that have lost their life savings in these stocks as they never suspected that a high level KRG official would be that careless and corrupt.

So, if I am right about Hawrami and his actions/treatments toward the IOC’s, what is the solution? I think it is very clear to see that removing, and investigating, Hawrami immediately is warranted/ needed if the IOCs are going to survive and prosper. He must be replaced with someone that is well-educated, experienced and most importantly, honest and transparent. By doing so, we hope to see the IOCs can get back to working as they should without any pressure and any “funny business” from anyone within the KRG.

Bottom line, if GKP, and other IOCs, are going to survive and prosper, these two guys; Hawrami and Zahawi must get out of the picture.

No matter who is at fault and what deals are made behind the scene, the KRG must find a way to pay the IOC’s money owed so they can maintain their head above water and continue their work in Kurdistan. If those IOC go bankrupt, then Kurdistan will suffer in the long-run and will never ever recover from this. This is not a game to be play with. No one will ever trust in investing in Kurdistan in any sectors if a number of IOC go bankrupt and close their doors in Kurdistan.

After all, it is the IOCs that have put Kurdistan on the world’s map and they must be rewarded and taken care of by all. It is only proper to treat them fairly as they have done so much for the Kurds and Kurdistan. It is time to pay them what is owed and treat them with honesty and dignity. Enough corruption and cheating the IOCs and, especially their investors, that have placed so much faith and belief in the KRG.

I need to make known to all that I, and my family, do not own GKP stock, never owned the stock, never traded the stock (short and/or long positions) and I am merely sharing my findings with the readers. I want to see Kurdistan prosper and have a better future than we now have.

http://www.dailymail.co.uk/news/article-1261305/Iraqis-inquiry-Blair-Korean-tycoon-Oil-Minister-probed-corruption-claims.html#ixzz4674zueg5
http://www.dailymail.co.uk/news/article-2496955/Tory-MPs-claim-electricity-stables-exposed-Press-The-Press-wants-bring-state-control.html
http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/BMG4209G1087JEGBXSSMU.html?lang=en
http://www.publications.parliament.uk/pa/cm/cmregmem/160222/zahawi_nadhim.htm
http://www.publications.parliament.uk/pa/cm/cmregmem/160307/zahawi_nadhim.htm
http://www.publications.parliament.uk/pa/cm/cmregmem/160321/zahawi_nadhim.htm
http://www.dailymail.co.uk/news/article-1261305/Iraqis-inquiry-Blair-Korean-tycoon-Oil-Minister-probed-corruption-claims.html
http://www.mirror.co.uk/news/uk-news/millionaire-conservative-mp-nadhim-zahawi-2715379
http://www.coventrytelegraph.net/news/coventry-news/expenses-millionaire-mp-claims-10p-10036997