ECONOMY
The sun sets as flare stacks burn off excess gas at the Mushrif site inside the Zubair oil and gas field, north of the southern Iraqi province of Basra, on July 13, 2022. Photo: Hussein Faleh/AFP
ERBIL, Kurdistan Region - A petroleum association on Tuesday said that the international oil companies (IOCs) in Kurdistan Region will not produce oil until it is clear how they are to be paid for their contractual entitlements of sold oil, saying members are owed nearly $1 billion in arrears.
On Monday, the Turkish Energy and Natural Resources Minister Alparslan Bayraktar said during an energy forum in Abu Dhabi that the Iraq-Turkey pipeline exporting Kurdish oil through Turkey’s Ceyhan port was ready for operation and expected to resume exports “this week”.
The Association of the Petroleum Industry of Kurdistan (APIKUR) said in a statement that it
“welcomes this development [minister’s comments], which can be a step towards the long-awaited recommencement of international export of crude oil produced in the Kurdistan Region.”
The petroleum association stressed that even if the Iraq-Turkey pipeline were to reopen, the member companies would not be “in a position to produce oil for pipeline exports” IOCs are paid their contractual entitlements of oil sold and delivered “in the past and for future sales of such oil exports.”
“APIKUR members are currently owed nearly $1 billion in overdue and unpaid arrears,” stressed the association in the statement.
APIKUR stated that some IOCs hold production sharing contracts (PSCs), and in the absence of an agreement on payments, “member companies will have to sell their contractual entitlements of crude oil to buyers who can give certainty of payments for oil deliveries.”
Turkey stopped the flow of Kurdish oil through the Iraq-Turkey pipeline after a Paris arbitration court on March 23 ruled in favor of Baghdad, saying Ankara had breached a 1973 pipeline agreement when it allowed the Kurdistan Region to begin independent oil exports in 2014.
“The delays in re-opening the Iraq-Türkiye pipeline and resolving IOCs contractual entitlements are costing Iraqis an estimated $1 billion per month in lost revenues,” said Myles Caggins, spokesman for APIKUR.
“APIKUR members are keen to work with the Governments of Kurdistan and Iraq to reinstate these revenues and even increase them through maximizing production. We believe this can be done quickly and efficiently after payment arrangements are agreed and existing contractual arrangements are respected,” he added.
APIKUR, which includes international oil and gas companies that are either directly or indirectly involved in the production of Kurdish oil, called on all parties to “urgently engage with each other in a constructive manner,” in order to reach a solution that encourages international investments in Iraq.
In August, APIKUR called on both the Iraqi federal government and the Kurdistan Regional Government (KRG) to honor the contractual rights of the IOCs and ensure they are accounted for in the implementation of the budget and future hydrocarbon laws, saying implementation of the newly passed Iraqi budget and the proposed oil and gas bill should guarantee the IOCs rights to cost recovery and share of profits.
The halt in exports has caused the Kurdish and Iraqi governments about $6 billion dollars of losses since March, a senior Kurdish official said late last month.
About 400,000 barrels of oil were being exported daily by Erbil through the pipeline that runs to the Turkish port of Ceyhan before the halt, in addition to some 75,000 barrels from Kirkuk oil fields controlled by the Iraqi government.
In late August, Bayraktar met with Iraqi Oil Minister Hayyan Abdul Ghani to discuss the resumption of crude oil exports.
In July, Turkish President Recep Tayyip Erdogan said in a press conference that the suspension of the Kurdistan Region’s oil exports was the result of problems between the federal government and the KRG and that Ankara had no issues with receiving the oil. Days later, Iraq’s oil ministry responded that Erbil and Baghdad are on the same page regarding the resumption of exports.
Article 13 of the Iraqi federal budget for 2023 obliges Erbil to hand over at least 400,000 barrels of crude oil daily to Iraq’s State Oil Marketing Organization (SOMO) to be exported through Turkey’s Ceyhan port or to be used domestically in case it is not exported.
On Monday, the Turkish Energy and Natural Resources Minister Alparslan Bayraktar said during an energy forum in Abu Dhabi that the Iraq-Turkey pipeline exporting Kurdish oil through Turkey’s Ceyhan port was ready for operation and expected to resume exports “this week”.
The Association of the Petroleum Industry of Kurdistan (APIKUR) said in a statement that it
“welcomes this development [minister’s comments], which can be a step towards the long-awaited recommencement of international export of crude oil produced in the Kurdistan Region.”
The petroleum association stressed that even if the Iraq-Turkey pipeline were to reopen, the member companies would not be “in a position to produce oil for pipeline exports” IOCs are paid their contractual entitlements of oil sold and delivered “in the past and for future sales of such oil exports.”
“APIKUR members are currently owed nearly $1 billion in overdue and unpaid arrears,” stressed the association in the statement.
APIKUR stated that some IOCs hold production sharing contracts (PSCs), and in the absence of an agreement on payments, “member companies will have to sell their contractual entitlements of crude oil to buyers who can give certainty of payments for oil deliveries.”
Turkey stopped the flow of Kurdish oil through the Iraq-Turkey pipeline after a Paris arbitration court on March 23 ruled in favor of Baghdad, saying Ankara had breached a 1973 pipeline agreement when it allowed the Kurdistan Region to begin independent oil exports in 2014.
“The delays in re-opening the Iraq-Türkiye pipeline and resolving IOCs contractual entitlements are costing Iraqis an estimated $1 billion per month in lost revenues,” said Myles Caggins, spokesman for APIKUR.
“APIKUR members are keen to work with the Governments of Kurdistan and Iraq to reinstate these revenues and even increase them through maximizing production. We believe this can be done quickly and efficiently after payment arrangements are agreed and existing contractual arrangements are respected,” he added.
APIKUR, which includes international oil and gas companies that are either directly or indirectly involved in the production of Kurdish oil, called on all parties to “urgently engage with each other in a constructive manner,” in order to reach a solution that encourages international investments in Iraq.
In August, APIKUR called on both the Iraqi federal government and the Kurdistan Regional Government (KRG) to honor the contractual rights of the IOCs and ensure they are accounted for in the implementation of the budget and future hydrocarbon laws, saying implementation of the newly passed Iraqi budget and the proposed oil and gas bill should guarantee the IOCs rights to cost recovery and share of profits.
The halt in exports has caused the Kurdish and Iraqi governments about $6 billion dollars of losses since March, a senior Kurdish official said late last month.
About 400,000 barrels of oil were being exported daily by Erbil through the pipeline that runs to the Turkish port of Ceyhan before the halt, in addition to some 75,000 barrels from Kirkuk oil fields controlled by the Iraqi government.
In late August, Bayraktar met with Iraqi Oil Minister Hayyan Abdul Ghani to discuss the resumption of crude oil exports.
In July, Turkish President Recep Tayyip Erdogan said in a press conference that the suspension of the Kurdistan Region’s oil exports was the result of problems between the federal government and the KRG and that Ankara had no issues with receiving the oil. Days later, Iraq’s oil ministry responded that Erbil and Baghdad are on the same page regarding the resumption of exports.
Article 13 of the Iraqi federal budget for 2023 obliges Erbil to hand over at least 400,000 barrels of crude oil daily to Iraq’s State Oil Marketing Organization (SOMO) to be exported through Turkey’s Ceyhan port or to be used domestically in case it is not exported.
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