The Kurdish government in Iraq said Monday it would allocate some of its revenue to international oil companies on a monthly basis to help cover their expenses.
British energy company Gulf Keystone Petroleum, one of the key players in the Kurdish oil sector, in early 2015 suspended crude oil exports through Turkey and directed sales to the local market briefly because of a lack of payment from the Kurdish government.
The Kurdish north hosts some of the larger oil fields in Iraq. The Ministry of Natural Resources for the semiautonomous Kurdistan Regional Government said that, while crude oil exports are its principle source of revenue, energy companies operating in the region face difficulties moving forward without their share.
"Therefore, from September onwards, the KRG will on a monthly basis allocate a portion of the revenue from its direct crude oil sales to the producing international oil companies, to cover their ongoing expenses," it said in a statement. "Furthermore, as export rises in early 2016, the KRG envisages making additional revenue available to companies to enable them to begin to catch up on the past receivables due under their production sharing contracts."
The Kurdish government in early 2015 reached a deal with the federal government in Baghdad to export some of its crude oil in exchange for a portion of overall oil revenue. The KRG under the terms of the agreement funnels 250,000 barrels of oil per day to Baghdad and agrees to use the federal State Oil Marketing Organization for marketing.
Genel Energy, led by former BP Chief Executive Officer Tony Hayward, is a lead producer in the Kurdish north, boasting net production for the first half of 2015 of an average 88,800 bpd, a 41 percent increase year-on-year.
Andrew Benbow, a spokesman for Genel, said in response to email questions more comments on the payment scheme would come when the company releases second quarter figures Thursday. For now, he said, Genel was letting the Kurdish government's statement "speak for itself."
The Kurdish government cautioned that the federal government has yet to meet its payment obligations, to which it responded with unilateral exports through Turkey to help pay government and military salaries.
"Although the revenue gained from direct sales is still below Kurdistan's 17 percent share of the federal budget, it is significantly higher than the amount the federal government was able to allocate to the KRG on a monthly basis," it said.