Increase in oil export from the Kurdistan Region of Iraq Announced
The Ministry of Natural Resources announced an increase in oil export from the Kurdistan Region of Iraq. Daily flow rates through the Kurdistan crude pipeline to Turkey have risen from 185,000 in August to nearly 300,000 in the first week of November, representing an increase of some 60 percent over the last four months.
By the end of this year, the Kurdistan Regional Government (KRG) plans to increase export to around 400,000 barrels per day (bpd) and to 500,000 bpd by the end of the first quarter of 2015. The KRG remains on track to meet its production target of 1 million barrels per day by end 2015/early 2016.
On behalf of the people of the Kurdistan Region, the KRG exercises its Constitutional rights to manage, produce, market and sell the natural resources located under its control.
Since January 2014 to date, 34.5 million barrels (mmbbls) of oil have been exported from the Kurdistan Region, of which 21.5 mmbbls were sold through Ceyhan. The balance was trucked to Mersin in Turkey.
The total value of the exported oil in cash or kind is $2.87 billion, of which $2.1 billion was received in cash and $775 million in kind for product swaps (710,000 metric tonnes of products consisting of kerosene, benzine and diesel).
From the cash payments, some $400 million has been used to pay both trucking costs and as part payment to the oil producers. Hence, the net cash received by the KRG during this period is $1.7 billion. In addition, the KRG has also received a further $500 million in prepayment from committed purchasers of crude against future deliveries of oil piped to Ceyhan.
All proceeds from the sale of oil are treated as part of the KRG’s Constitutional entitlement to 17 per cent of Iraq’s revenues and to 17 per cent of Iraq’s refining volumes for domestic consumption.
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.
Nevertheless, these revenues are helping the Region survive the serious challenges to its continued welfare and stability: the vital fight against ISIS terrorists, the unprecedented influx of refugees and IDPs, and the economic sanctions imposed by Baghdad.
The commitment to operations shown by international and domestic oil companies has helped to boost oil production in the Region to record levels, and the establishment of and continuing improvements to the export pipeline infrastructure in turn has allowed an increasing amount of oil to be sold on international markets.
The KRG recognises that, for the continuing growth of the Kurdistan oil industry, it is necessary that contractors receive payments in line with their contractual entitlements. In November, the KRG will make an initial payment of $75 million on account to producers for exports, with further payments to follow on a regular basis. With further production increases, producers will receive their full contractual entitlements.
In these difficult times for the Kurdistan Region of Iraq, the KRG is grateful for the support received from our contractors, who continue to stand behind the people of Kurdistan.
Source: KURDISTAN REGION OF IRAQ