'Cut all non-essential activity'
Genel Energy workforce slashed as pipeline shutdown continues
ERBIL, January 25 – Genel Energy, a prominent oil company operating in the Kurdistan Region, has announced significant job losses in its latest trading and operations update. The cuts, which amount to over two-thirds of the workforce, come as a direct response to the prolonged suspension of Kurdish oil exports through the Iraq-Turkey pipeline.
For nearly a year, the pipeline, a crucial export route for Iraqi oil, has remained inactive, causing substantial disruptions in the regional oil market. Political and legal disputes first between Iraq and Turkey, then between the Iraqi government and the Kurdistan Regional Government (KRG) have meant efforts to resume oil flows remain unsuccessful.
The halt in exports has forced Genel Energy to pivot towards domestic sales and reduce non-essential activities and costs. Despite these efforts, the company’s financial stability has been severely affected, leading to drastic workforce reductions.
Paul Weir, the company’s chief executive, said: “Since the suspension of exports through the Iraq-Türkiye pipeline in March last year, we have reshaped the business to provide long-term resilience and maximise potential upside exposure for shareholders. We have cut all non-essential activity and significantly reduced spend, while developing a new source of income through domestic sales.”
Despite the staff cuts, positive free net cash flow plunged from $235 million in 2022 to just $72 million in 2023. The pipeline transporting Kurdistan oil was shut off in March last year following Iraq’s arbitration victory over Turkey, which had for years facilitated the Kurdistan Region’s independent energy policy that bypassed Baghdad in favor of marketing its own oil and gas.
The dispute is now seen to be between the KRG and Iraq’s federal government in Baghdad. Specifically, the federal budget law’s provisions for paying oil companies for work conducted in the Kurdistan Region. KRG officials say the federal budget’s fixed rate is far below cost for producers.