Update on Shaikan Field exports

27 March 2023

Gulf Keystone Petroleum Ltd. (LSE: GKP)

(“Gulf Keystone”, “GKP” or “the Company”)

Update on Shaikan Field exports

Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, has noted reports that the long running arbitration case between Iraq and Turkey concerning the Iraq-Turkey export pipeline has been awarded in Iraq’s favour. The arbitration dates back to 2014, when Iraq claimed at the International Chamber of Commerce in Paris that Turkey was violating the terms of a 1973 bilateral agreement by allowing the Kurdistan Regional Government (“KRG”) to export crude through the pipeline without Baghdad’s consent.

Subsequent to the Court’s reported decision, the Kurdistan Pipeline Company notified GKP on 25 March that the Iraq-Turkey pipeline has been shut-in at Turkey’s request until the situation is resolved. The KRG exports crude from the Shaikan Field and other fields in the region via this route. GKP’s facilities have storage capacity that allow continued production at a curtailed rate over the coming days after which the Company will suspend production.

Although it is not yet clear when export operations will resume, public statements made by the KRG, Kurdistan’s Ministry of Natural Resources (“MNR”) and the Iraqi Ministry of Oil (“MOO”) lead us to believe that the suspension of exports will be temporary:

• The KRG’s Prime Minister, Masrour Barzani, has stated that the KRG’s “recent understandings with Baghdad have laid the groundwork for us to overcome the arbitration ruling”. He also noted that a delegation from the KRG was in Baghdad yesterday “to build on the goodwill of our discussions”
• The MNR has also stated that the arbitration ruling “will not hinder our relations with the Baghdad government”
• The MOO has stated that “it will discuss the mechanisms of exporting Iraqi oil through the Turkish Port of Ceyhan with the concerned authorities in the [Kurdistan] region and with the Turkish authorities” and that “it is in the interest of the Ministry to export the full quantities allocated from all oil fields, including the [Kurdistan] region, with the aim of maximising financial revenues, to supplement the federal budget”

Gulf Keystone welcomes these statements and believes they are reflective of improving relations and communication between Iraq and Kurdistan since the formation of a new government in Iraq in October 2022. Since then, both governments have been regularly engaging on a number of issues, including the development of a new oil and gas law.

The Company also notes the approval by the Iraqi Cabinet earlier this month of a draft three-year federal budget to be submitted to the Iraqi Parliament for final approval, which includes a mechanism to ensure ongoing exports of 400,000 bopd of Kurdistan production in return for federal budget transfers. The budget was agreed on the same day that Iraq completed a budget transfer of 400 billion dinar (c.US$275 million) to the KRG.

GKP is closely monitoring the situation and engaging with both the KRG and the MNR. The Company will provide further updates to the market, as appropriate.

Enquiries:

or visit: www.gulfkeystone.com

Notes to Editors:

Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading independent operator and producer in the Kurdistan Region of Iraq. Further information on Gulf Keystone is available on its website www.gulfkeystone.com

Disclaimer

This announcement contains certain forward-looking statements that are subject to the risks and uncertainties associated with the oil & gas exploration and production business.  These statements are made by the Company and its Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent risks and uncertainties, including both economic and business factors and/or factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy.  This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.