KRG says to begin payments to oil companies in September

ARBIL - Reuters

REUTERS photo

Iraqi Kurdistan Regional Government (KRG) said on Aug. 27 it expected to begin making regular payments to oil-exporting companies in the first half of September, in an apparent attempt to reassure foreign oil companies operating in the autonomous region.

Its Ministry of Natural Resources said in a statement that $75-$100 million of revenue from its direct crude oil sales would be allocated as payment on account to the companies.

The region has ramped up independent sales since mid-June while cutting allocations to Iraq’s state oil firm SOMO in an escalating dispute over export rights and budget payments that resulted in companies going unpaid.

“Regular payments will allow the exporting companies to cover their ongoing expenses and plan for further investment in the oil fields, which will in turn boost production,” the statement read.

“As oil export rises in early 2016, the KRG envisages making additional revenue available to the exporting IOCs to enable them to begin to catch up on the past receivables due under their production sharing contracts.”

Gulf Keystone Petroleum said on Aug. 27 it was owed $283 million for oil sales and other costs from the KRG.

June was the first month of large independent sales since December last year, when the KRG reached a deal with Baghdad to transfer an average of 550,000 bpd in 2015 in return for the reinstatement of budget payments.

An average of 516,745 bpd was exported from the Kurdistan region in July via pipeline to the Mediterranean port of Ceyhan in Turkey, of which only 71,017 bpd went to SOMO.