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KRG promises September payments to IOCs

The Kurdistan Regional Council for Oil & Gas Affairs expects the first tranche of regular payments to be made available to IOCs in the first half of September 2015

One such, Norway’s DNO, calculates it is owed $947m.

According to a statement by the natural resources ministry, the council has approved the allocation of $75m-$100m 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 contributions. 

The statement said also that: “It is further recognized that with the steep fall in the price of oil, it is difficult for the international oil companies 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 exports rise 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, it said.

DNO set record production levels from the Tawke field in the second quarter of 2015 with output averaging 153,346 barrels/day (b/d). It delivered 118,037 b/d or 77% of field production to the Kurdistan Regional Government for pipeline export through Turkey.

It sold another 31,378 b/d to the local market and the rest was processed in the company's Tawke refinery. DNO said it welcomed “the promised regular export payments which are necessary to sustain our operations in Kurdistan and without them it would not be in a position to make further investments, meaning that Tawke’s production would decline.” It told Petroleum Economist on 27 August that it was not able to comment further. 

Of the money owing, it said $829m represented unbooked revenues for export sales and $118m represented booked revenues for local sales and refined product sales.

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