Plans to export natural gas from Iraqi Kurdistan got a boost after reserves were upgraded at two key fields. Yet successful development still hinges on the region’s turbulent politics.

The Miran and Bina Bawi deposits hold 14.8 trillion cubic feet of contingent gas resources, explorer Genel Energy Plc said Friday in a statement after an audit was carried out by RPS Energy Consultants Ltd. That’s an increase of more than 40 percent from the previous estimate in 2016.

The upgrade is a boon for Genel, whose fields could turn the semi-autonomous province into a gas exporter by sending fuel to Turkey. But risks remain. The project stalled last year after an independence referendum stoked tensions between the Kurdistan Regional Government and federal authorities. The vote also infuriated Turkey, which has its own restive Kurdish population.

“The referendum has really been the key to what is or isn’t going to happen with Miran and Bina Bawi,” Daniel Slater, an analyst at Arden Partners Plc, said before Friday’s resource update. While the fields could be a “significant source of upside” for Genel, there’s little hope of “any material progress on funding or anything else on it until the tensions between the KRG and Baghdad die down.”

Shares in Genel rose as much as 9 percent in London trading, reaching the highest level in more than three months. They were trading 7.2 percent higher at 136.2 pence as of 2:10 p.m. local time.

The standoff following the Kurdish vote led to the shutdown of key crude flows from the disputed area of Kirkuk after Baghdad seized control of oil fields. Genel’s oil operations weren’t affected, but the company had already said it was looking to natural gas for future growth.

Last February, the KRG committed to buy the gas from Miran and Bina Bawi for export, signing accords with Genel with a one-year option to terminate. While crucial for Genel’s plans to create a “transformational” gas business, the fields are also key to the KRG: the region pumps just 310 million cubic feet a day from its Khormor field, all for the local market, Wood Mackenzie Ltd. data show.

Genel expects to complete a plan to develop the fields shortly, and is also looking at ways to transport and sell the gas, according to the statement. A final investment decision could be taken once there’s sufficient progress on these elements, it said.

Going It Alone

Production at Miran and Bina Bawi is reliant on construction of a processing plant and export pipeline, which the KRG would oversee. The fields also hold significant amounts of toxic sulfur, which makes development more complex, according to Wood Mackenzie.

“These are very good assets, but quite complicated and difficult as well for just Genel to do it on its own,” Homayoun Falakshahi, a WoodMac analyst, said before the reserves update. “The project needs the stars to be aligned, but it’s not the case for the moment.”

Genel said in June that “powerful, big, international companies” were interested in the gas-export project alongside a firm called Turkish Energy Co., but no progress on partnerships has been communicated since. The company’s next trading update is due Jan. 25.