By John Lee.
Shares in oil companies operating in Iraqi Kurdistan have been hit by a change in payment terms imposed by the Kurdistan Regional Government (KRG).
Genel Energy, Gulf Keystone Petroleum (GKP) and DNO this morning reported to the markets that they have received letters from the KRG proposing an amendment to payment terms due to the ongoing challenges in Iraq with the COVID-19 pandemic, starting with the March 2021 production invoice.
They said that since the dated Brent price has remained consistently well above $50 per barrel, the monthly repayment of outstanding arrears will now be calculated as 20 percent (compared to 50 percent previously) of the difference between the average monthly dated Brent price and $50 per barrel.
The KRG added that payment terms will be 60 days after the submission of invoices, and that the KRG will re-evaluate this payment model should markets see substantial volatility.
The oil companies have not agreed to these terms, and are seeking discussions with the KRG.
Shares in Genel Energy were down more than 12 percent before recovering slightly, while Gulf Keystone Petroleum (GKP) fell more than 6 percent before recovering slightly. The Oslo Stock Exchange, on which DNO is traded, is closed for the Ascension Day holiday.
(Sources: GKP, Genel Energy, DNO)