KRG Approves Payment to IOCs

Further to the Ministry of Natural Resources communiqué of August 3, 2015 regarding payments to the exporting international oil companies (IOCs) in the Kurdistan Region, the Kurdistan Regional Government has confirmed that the Kurdistan Regional Council for Oil & Gas Affairs expects the first tranche of regular payments to be made available to the exporting companies during the first half of September, 2015.

The Oil & Gas Council has approved the allocation of $75-$100 million of the revenue from the KRG’s direct crude oil sales as payment on account to the exporting IOCs, to be distributed in broad proportion to the companies’ past and present contributions to export.

Crude oil export is the principal revenue earner for the Kurdistan Region and helps to pay civil service salaries, maintain vital government services and defend the Region against Islamic State terrorism.

It is further recognized that with the steep fall in the price of oil, it is difficult for the IOCs to sustain oil export at current levels without receiving some of their financial dues on a predictable basis. 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.

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. The KRG again acknowledges and appreciates the contribution to the Kurdistan Region made by the IOCs and their success this year in raising oil export from Kurdistan to record levels in a challenging environment.

(Source: KRG)

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