CompanyGraph
Gulf Keystone Petroleum Limited
GKP · Bermuda
Extracts crude from a Jurassic carbonate reservoir in Kurdistan Iraq under an 80% working interest production sharing contract whose export value is gated by a single Iraq-Turkey pipeline.
Shaikan's Jurassic carbonate geology requires co-mingled water handling infrastructure that is already sunk and calibrated to that specific reservoir, which means incremental production growth comes through additional development wells at known costs rather than new capital commitments — but that efficiency is entirely conditional on export access, because the same barrels shift from Brent-linked contract payments to structurally lower local Kurdistan refinery payments whenever the Iraq-Turkey pipeline closes. That pipeline's availability is subject to unilateral closure by the Kurdistan Regional Government, the Baghdad federal government, or the Turkish government in parallel, none of which the company controls, so reservoir performance and drilling execution have no bearing on the ceiling that politics places on realized value per barrel. The 80% working interest, the proven infrastructure, and all production are concentrated in one bounded block, so a single disruption — whether technical, security-related, or contractual — removes the entire operating base at once because there is no alternative source to absorb the loss. That same concentration creates replacement friction in the opposite direction: the sunk water handling infrastructure, established Kurdish institutional relationships, and existing crude supply contracts mean any operator seeking to displace Gulf Keystone would inherit rather than rebuild a system already calibrated to Shaikan's specific geology.
How does this company make money?
Money flows in through the production sharing contract mechanism: the company first recovers its costs from a defined share of production (cost oil), then splits the remaining production (profit oil) with the Kurdistan Regional Government according to the contract terms. Barrels sold through the Iraq-Turkey pipeline are priced against the Brent crude benchmark; barrels redirected to local Kurdistan refineries are sold at local Kurdistan pricing, which sits below the Brent-linked export price.
What makes this company hard to replace?
If the company were displaced, the Kurdistan Regional Government would need to find replacement operators qualified in carbonate reservoir development with established relationships to Kurdistan institutions. Existing Shaikan crude supply contracts with Turkish and local buyers would require renegotiation with any new operator. The water handling and field development infrastructure already in the ground represents sunk capital specific to Shaikan geology that a replacement operator would need to take over rather than rebuild.
What limits this company?
The Iraq-Turkey pipeline is the sole export pathway capable of delivering Shaikan crude at Brent-linked pricing, and access to it is subject to unilateral closure by any of three independent authorities — the Kurdistan Regional Government, the Baghdad federal government, and the Turkish government — none of which the company controls. When the pipeline closes, throughput does not fall but the ceiling on realized price per barrel falls to local Kurdistan refinery pricing, capping the economic return on every barrel produced regardless of reservoir performance.
What does this company depend on?
The company depends on the Kurdistan Regional Government's production sharing contract and operating permits to extract crude legally, the Iraq-Turkey pipeline system to move crude to export markets, dedicated water injection and handling infrastructure to manage the carbonate reservoir's pressure regime, Kurdistan peshmerga security forces to protect field operations, and specialized carbonate reservoir drilling and completion services to develop the block.
Who depends on this company?
Turkish refineries receiving Shaikan crude through the Iraq-Turkey pipeline would lose a specific crude grade when export flows resume. Kurdistan local refineries would face reduced feedstock availability, affecting regional fuel supply. The Kurdistan Regional Government would lose production sharing contract receipts denominated in US dollars.
How does this company scale?
Additional development wells in the proven Shaikan reservoir can replicate production at known drilling costs using established completion techniques, making incremental volume growth achievable within the block. The 80% working interest in the specific Shaikan production sharing contract cannot be replicated, because that contract covers a defined geographic block with established reservoir boundaries that no new entrant can simply acquire.
What external forces can significantly affect this company?
US dollar exchange rate fluctuations affect receipts denominated in dollars relative to local costs paid in Iraqi dinars. Turkish foreign policy toward Kurdistan shapes the pipeline transit agreements that govern export access. Baghdad federal government assertions of constitutional authority over Kurdistan oil exports — bypassing KRG control — create a recurring jurisdictional pressure on whether exports can flow at all.
Where is this company structurally vulnerable?
Because operator control, the 80% working interest, and proven infrastructure are all concentrated in one bounded block, any event that impairs that single block — technical reservoir failure, security disruption to field operations, or a KRG contract dispute — removes all production at once with no alternative source to substitute, collapsing the entire operating base rather than a segment of it.