KRI to make payments to oil companies

Kurdistan Oil - William John Gauthier - FlickrInternational oil companies in the region have hardly received any payments since May 2014. (Image source: William John Gauthier/Flickr)The Kurdistan Regional Government (KRG) will allocate a portion of the revenue from its direct crude oil sales to the producing international oil companies (IOCs)

Starting in September this year, KRG will allocate a portion of revenues from the sales of crude oil to producing IOCs on a monthly basis. If exports increase in 2016 as planned, KRG hopes to make additional revenue available to the IOCs.

The federal government in Iraq has been unable to provide Kurdistan Region of Iraq (KRI) with its monthly budgetary dues, as per a deal reached between the two sides in early 2015. As a result, KRG has introduced direct crude oil sales from Ceyhan to meet its various expenses.

In absence of payments from the Iraqi government, crude oil export is the principal revenue earner for KRI. At the same time, it is difficult for IOCs to sustain oil export at its current levels without receiving their financial dues, let alone increase it as planned.

The producing IOCs in the region have maintained operations and have continued to invest to support KRI’s crude oil export despite having received hardly any payments for their crude oil production since May 2014.

KRG has, therefore, decided to allocate a portion of the revenue from its direct crude oil sales to the producing IOCs that will cover their ongoing expenses. As exports rise in early 2016, KRG will allocate additional revenue available to IOCs which will start the process of making up the past receivables due to them under their production sharing contracts.

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