LONDON: Iraqi Kurdistan-focused Genel Energy said on Tuesday it was confident that construction on its Bina Bawi gas project would begin next year as it discusses exact terms with the Kurdistan Regional Government (KRG). The London-based company wrote down $424 million at the Miran field in March amid slow progress on Bina Bawi, which will be developed first. Genel wants to use money from oil output at Bina Bawi to fund a phased development for full-scale gas production. “Commercial discussions continue on Bina Bawi, and we are increasingly confident of making sufficient progress to enable work on the ground to begin next year, with the potential for Bina Bawi oil to also add to our production in 2020,” it said. “Genel and the KRG are now aligned on a phase one upstream project scope delivering a reduced c. 250 million standard cubic feet a day raw gas. The KRG and Genel will jointly fund the midstream gas development required to process the raw gas.” Commercial terms could be reached as late as April for work on the ground to begin next year, Genel‘s new chief executive, Bill Higgs , said. Genel said it would pay an interim dividend of $0.05 per share, amounting to $14 million, as part of its pledge to disburse at least $40 million a year. Earlier this year it paid $0.10 a share, amounting to $27.9 million. Genel, which is seeking acquisitions to add near-term production in or outside Iraq, said it had $390 million of cash as of Aug. 5. It is investing in its recently acquired stake in the Sarta field, where output can start within a year, Higgs said. He said free cash flow for this year should be in excess of $100 million with oil at $60 a barrel, compared with Genel‘s previous guidance of $100 million at $45 a barrel. Capital discipline was the priority, he said, adding that a $7 million headroom for further share buybacks this year, out of a $10 million programme, was an option to be tapped but might not necessarily be used fully. “The fact that net cash could exceed the current market cap within five years is unsustainable and will put upward pressure on the shares,” BMO Capital Markets analyst David Round said in a note. “Add to that the potential from Sarta and we would argue that Genel‘s investment case hasn’t looked this appealing for a number of years,” Round said.