Iraq’s Kurdistan regional government will pay $75 million to oil producers this month and plans to make regular payments for exports in future.
Producers including Genel Energy Plc (GENL) and Gulf Keystone Petroleum Ltd. (GKP) have been waiting for the regional authority to settle its dispute over export rights with the central government to receive payments.
“The KRG recognizes that, for the continuing growth of the Kurdistan oil industry, it is necessary that contractors receive payments in line with their contractual entitlements,” it said in an e-mailed statement. The producers “will receive their full contractual entitlements” as they increase output.
The region, which raised its oil exports through pipeline to Turkey by 62 percent to 300,000 barrels of oil a day this month since August, plans to raise that further to 400,000 barrels a day by the end of this year and 1 million barrels at the beginning of 2016.
Gulf Keystone rose 13 percent to 75 pence at the close in London after the statement. “This is obviously a very positive development,” Mark Antelme, spokesman of the company said. Genel shares gained 3.7 percent to 754 pence.
The Iraqi Kurdish government exported 34.5 million barrels of oil for a total value of $2.87 billion, it said in the statement today. It received $2.1 billion in cash and $775 million worth of oil products, it said.
“All proceeds from the sale of oil are treated as part of the KRG’s constitutional entitlement to 17 percent of Iraq’s revenues and to 17 per cent of Iraq’s refining volumes for domestic consumption,” the Kurdish authority said. “The revenue accounts for only a fraction of the KRG’s annual entitlement from Iraq’s 2014 budget, which has been suspended by the federal government since January 2014.”
Oil production has increased after companies returned staff to the region last month. In August they evacuated workers and halted drilling following Islamic State’s attacks in northern Iraq and neighboring Syria.