The number of oil producers in Kurdistan will slump by three-quarters in five years with the biggest in the industry taking control in the region, according to Genel Energy CEO Tony Hayward.

“It’s likely that we’ll end up with, perhaps, five or six of the largest companies operating, with Genel, Exxon, Chevron ending up as major operators,” Hayward said in a Nov. 21 interview during the Atlantic Council conference in Istanbul. “It’s what happens in most hydrocarbon provinces.”

Exxon Mobil Corp., Chevron Corp. and DNO ASA of Norway are among more than two dozen international oil companies with a combined 35 licenses in the Kurdish Regional Government (KRG) area. The companies export about 350,000 bbl/d of crude, pumping it through a Turkish pipeline to the Mediterranean.

Genel has spent more than $1 billion since 2012 on acquisitions in Kurdish-controlled northern Iraq, giving the London-based company joint ventures in seven of the region’s oil and gas fields. This month it agreed to pay $150 million for OMV AG’s 36% stake in Bina Bawi, making it the sole owner of the gas field.

“Having made four or five investments in the region, we are continuously looking for opportunities,” Hayward said.

The producer expects approval by the end of this year for an agreement signed with the KRG last week to develop the Miran and Bina Bawi gas fields, which will start sending Turkey 4 Bcm (141 Bcf) of gas a year from 2018. That export volume could more than double by 2020 and increase fivefold to 20 Bcm (706 Bcf) by 2025, Hayward said.

Gas Reserves

Officials in Turkey said the country plans to build a pipeline to import the fuel.

Development starts next year at Miran, which has gas reserves of 113 Bcm (4 Tcf), and Bina Bawi, with double that volume, according to Hayward. Genel will sell unprocessed gas from the two fields to the KRG at a price of 78 U.S. cents per million British thermal units after investing in drilling wells and flow lines, he said.

“We will earn our return through the condensate we’ll strip from the gas and the oil associated with the gas field and KRG will get this gas at a very cheap price,” Hayward said. The KRG will build a gas-processing plant in which Turkish builders and lenders will participate, he said.

Genel, which doesn’t need partners for the gas fields, would have to spend about $1 billion over three years to develop them, Hayward said. The KRG’s processing plant would cost as much as $6 billion, with potentially about half coming from Turkish bank loans and the rest as equity from Turkish contractors, he said.

Lowest Cost

The KRG will sell the gas to Turkey at $7 per million Btu, according to a 2013 agreement between the regional government and Turkey, he said. The wholesale market price for gas-fired power plants in Turkey is $10 to $11 per million Btu, Hayward said. Turkey imports almost all of its gas needs, with Russia supplying 60%.

“This is one of the lowest-cost prices in the world today, actually, and right on the Turkish doorstep, only 100 kilometers [62 miles] away,” Hayward said. “Kurdish gas has certainly the potential to match Russian gas for the Turkish market.”

Turkey plans to build a pipeline extension to the Iraqi border to import gas from Kurdistan, two Turkish officials with knowledge of the matter said last week. It would carry as much as 20 Bcm (706 Bcf) of gas a year, one of them said.