Questor share tip: Genel a hold while politics dominate The majority of Genel's assets are in the semi-autonomous Kurdistan region in Iraq. The region has significant oil reserves which literally ooze out of the ground in some places. However, there is no agreement yet on an oil law that will set out the terms of how revenues are shared between the central Iraqi government in Baghdad and the Kurdish Regional Government (KRG), based in Erbil. Last week Genel said it expected 2012 revenues would be ahead of previous guidance at around $330m (£208m) after production from the its Kurdish fields averaged 44,500 barrels of oil per day over the year. In the absence of an oil law Genel has been selling crude into the domestic market for about $70 a barrel. Any allowed exports have been managed by the central government in Baghdad. However, Genel recently started to export oil to Turkey directly by truck instead of through the Baghdad-controlled pipeline. This follows a delay in receiving payments for the exports managed by the central government. Genel is currently selling the oil in Turkey and handing 83pc of the money received to Baghdad. Genel said it had been given permission by the KRG for the exports, which was "consistent with the Iraqi constitution of 2006." Initial export volumes are small but Genel expects to grow these to around 20,000 bpd over the next six weeks. In order to diversify country risk, Genel has started to build up a portfolio of exploration assets in Africa. This is a sensible strategic move, but any upside will not been seen for some time. In order for management to realise the full value of these assets an agreement between Erbil and Baghdad needs to be struck on sharing revenues from Kurdish production. Forging a proper deal is in the interests of both governments, as the revenues will be significant and useful in the development of both regions. However, the relationship been Baghdad and the KRG is very complex, particularly since the KRG has signed agreements with big oil companies such as ExxonMobil and Chevron, circumventing Baghdad. In the end, Baghdad and Erbil are going to have to compromise - but there will be plenty of brinkmanship before this happens. If a deal is reached, Genel shares represent a cracking investment on a medium-term view. But the timing of this all dependent on internal Iraqi politics. Questor has recommended a buy at 695p, 737p and 825p. The rating, for now, is hold.