Adel Abdul-Mahdi *: How calculated dues of oil companies?

- PUBLISHED IN 12/20/2015

Licensing contracts is a service or contractor to sustain and develop oil and gas fields for decades. It manages the operation of joint committees between the two parties under the chairmanship of Iraqi party's majority owner. This committee decides to production and project implementation plans, and at the end of each chapter (3 months) companies provide lists of expenses, which scrutinizes, and the headquarters of which are accepted, the ministry of you pay for companies, either in quantities of crude calculated at current prices, or cash.

To understand the licensing contracts must understand that what you get from the company's profit is a lump sum (US $ 1.15-6 / barrel, according to contracts) for each additional barrels when production exceeds 10% of the so-called "production base", ie the production of the field before signing the contract . And, of course, also pay the operating and investment expenses of the business and the purchase of equipment and installation facilities, and spent by the company to sustain the production and development of the field. And the duration of his contract, also has a roof-called "peak production" .. and be all the installations and oil underground king of Iraq .. and we'll show speak above, the steps below, bypassing some of the details, to avoid complexity.

1. "supposed to return" Product = oil price per barrel

2. "supposed to return" 2 = 50% of revenue, take full government

3. 50% of the second return, or so-called "yield available", dividing the three doors.

4. the first to pay the operating and investment costs incurred by the foreign company.

5. second for the payment of wages of profitability (US $ 1.15-6-by-contract) extra per barrel above the "production base", to be divided in two.
Contractor shall share 75% (B) the government's stake to 25%. (It was amended on the share of government partner in 2013 and different ratios of the contract to another)

6. It is the third of the remaining "yield available" in (3), and goes to the government to be added to the 50% in (2) above.

So what received by the contractor or the company is operating and investment costs (4), in addition to the wages of profitability (5 / A), less is paid back by companies of tax on profits (35%), go to the Treasury.

Iraq and receives 50% of the "supposed to return" (1) + remainder of the yield available (6) + government partner's share (5 / b) + tax on the company's profits.

There is no debt on Iraq, and each chapter is repaid operational and capital expenditures for the previous separation or some of the remainder of the one before it, with all the Iraqi and foreign labor, imports and facilities primary and secondary and the work paid to the companies, in addition to the profit of the company which is (1.15-6) dollars each additional barrels over "the production of the foundation." Calculations are clear, and the mistakes committed by some confusion on them, and the vision of public opinion, is that they calculate expenses like a return to companies .. or counted only exports and beat that in the current oil prices, and forget the whole production, Vijrgeon rates do not match at all with reality ..
note that what is consumed internally (refineries, electricity, etc.) figures preliminary, and measure the rest of the year on year rate, and neglecting some of the details, will be by the end of 2015, the size 184 593 111 barrels of oil, which constitutes 15.32% of the total production, which could be up to 1,204 , 92.362 barrels .. and this will be the value of what we consume internally 8405, to cope with declining resources .. and we continue to cooperate with companies to rationalize spending and remove any unnecessary expenses or exaggerated .. and there are other things in the contracts we are settled .. did well the House of Representatives in 2016 budget, that the request of the Ministry of Oil work on the revision of contracts and negotiate with the companies, which is what we are doing.
(*) Iraq's oil minister