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The Jersey-listed upstream oil company Genel Energy has cut its workforce by more than 50% in the wake of the closure of the Kirkuk-Ceyhan oil pipeline, which transports Iraqi oil through Turkiye to be exported internationally.

In a statement accompanying the company’s full-year results, Genel chief executive Paul Weir said: “It is difficult to look at 2023 without it being dominated by the closure of the Iraq-Turkiye pipeline.

“The suspension of our route to export resulted in a material reduction in production and cash flow.”

He added: “We have more than halved our workforce, and we have shed non-profitable assets.”

Weir said that he believed that the pipeline would reopen this year, but he did not give reasons why he thought the reopening would occur.

“The reopening of the export route, with a stable and predictable payment environment, is one of the numerous catalysts that we can see ahead in 2024,” he said.

Weir said the company is currently looking for opportunities outside Iraqi Kurdistan and would consider opportunities beyond the Mena region.

A two-week arbitration hearing recently took place in London over the production sharing contracts (PSCs) for Iraqi Kurdistan’s Miran and Bina Bawi oil fields.

Genel Energy had licences for the two oil fields until the Kurdistan Regional Government (KRG) terminated them in December 2021.

Genel is seeking compensation in the wake of the contract termination.

It says that it spent over $1.4bn acquiring and attempting to develop these assets, both as operator and non-operator, until the termination of both PSCs in December 2021.

The two-week arbitration hearing in London ended on 1 March 2024.

According to Genel, the timing of the result is uncertain, but is expected by the end of this year.

Genel’s net production in 2023 averaged 12,410 barrels a day (b/d), significantly down from the previous year, when the company produced 30,150 b/d.

Genel said that the significant drop in production was due to the closure of the Kirkuk-Ceyhan oil pipeline.

It said: “This caused there to be minimal sales in the second quarter of the year, before the local sales market was established in Q3 and production was then ramped up in Q4.”

All of Genel’s production in the second half of 2023 came from its Tawke PSC.

Gross production from the Tawke licence increased to 65,780 b/d in Q4 2023, up from 25,980 b/d in Q3.

At the end of 2023, gross production from the Tawke licence averaged 80,000 b/d.

In its end-of-year results, Genel said: “With operational spend having been reduced by 65%, the Tawke PSC is currently generating over $3m a month in net cash flow for Genel from strong local sales, which, if retained at current levels, is able to cover total organisational spend away from the licence.”

The company has scrapped plans to drill at the Taq Taq licence due to issues related to the closure of the Kirkuk-Ceyhan oil pipeline.

Genel and its partner, the US-based oil company Chevron, have scrapped plans to develop the Sarta oil field in Iraqi Kurdistan.

In its statement, Genel said: “Genel and its joint venture partner, Chevron, informed the Ministry of Natural Resources of its intention to surrender the asset and thereby terminate the Sarta PSC on 1 December 2023.”

Genel said it swung to a pretax loss of $28.3m in 2023, following its $122.1m profit in 2022. Revenue dropped by 79% to $84.8m from $401.9m.