By Simon Kent.
Newly appointed Minister of Oil Jabbar Ali al Luaibi has announced that the government’s plan to review contracts with IOCs is still in effect. Iraq has long been seeking contracts which reflect lower prices, since the technical service contracts (TSCs) signed in 2009 remunerate IOCs for a fixed per barrel fee.
This worked well for Iraq during times of high oil prices, but since the price collapse Iraq has struggled to pay the companies investment costs, which are due within a Quarter, racking up over $10 billion in debt last year. This has gradually been reduced to $4 billion and should be paid off by the Autumn, thanks to the IMF loan.
The latter development came with a pledge for Iraq to end late payments to IOCs as of this Summer, and gradually climbing prices prompted IOCs to modestly increase investment in Iraq this year following slashed expenditure after 2014.
New contracts are hoped to make the current situation more sustainable for both Iraq and IOCs, and are reported to resemble Production Sharing Agreements.