KRG to Pay Producing IOCs from September 2015

The Kurdistan Regional Government’s (KRG) Ministry of Natural Resources (MNR) announced Monday that the KRG will pay producing international oil companies (IOC) a portion of the revenue from its direct crude oil sales, on a monthly basis, from September 2015 onwards.

In a statement on the MNR’s website, the KRG recognized the “patience of the producing IOCs, which, despite receiving hardly any payments for their crude oil production since May 2014, have maintained operations and have continued to invest to support Kurdistan’s crude oil export”. As export rises in early 2016, the KRG has claimed that it aims to make additional revenue available to IOCs.

The MNR press release stated:

“The KRG acknowledges and appreciates the economic contribution to the Kurdistan Region made by the producing IOCs and their success in raising oil export from Kurdistan to record levels. They have demonstrated their commitment to the people of Kurdistan at a time when the Region has been fighting terrorism, enduring a budget shortfall from the federal government in Baghdad, and shouldering the social, political and economic burden of an influx of 1.8 million refugees and internally displaced people.

“Crude oil export is the principal revenue earner for the Kurdistan Region. But, it is also recognized that it is difficult for the IOCs to sustain oil export at its current levels, let alone increase it as planned, without receiving their financial dues. Therefore, from September 2015 onwards, the KRG will on a monthly basis allocate a portion of the revenue from its direct crude oil sales to the producing IOCs, to cover their ongoing expenses. Furthermore, as export rises in early 2016, the KRG envisages making additional revenue available to IOCs to enable them to begin to catch up on the past receivables due under their production sharing contracts.”

Commenting on the latest MNR announcement, Jon Ferrier, chief executive officer of Gulf Keystone said in a company release:

“Today’s statement made by the Kurdistan Regional Government’s Ministry of Natural Resources, our host government and long-standing partner, represents a further important step towards the establishment of a regular payment cycle for Shaikan crude oil sales pursuant to the Shaikan Production Sharing Contract.”

Gulf Keystone Petroleum suspended trucked exports of crude back in February due to delayed export payments from the Kurdish government, according to a report from Reuters. Another company affected by the lack of payment from the KRG is Genel Energy, who was owed $233 million on March 5, 2015, for oil sold to the Kurdistan Regional Government.