Kurdistan oil exports down and may stop due to non-payment of $1.5bn by federal government

27/03/2012 11:43

ERBIL, March 27 (AKnews) - Oil exports from the Kurdistan Region have been reduced to 50,000 barrels per day (bpd) and may terminate within one month if the federal government in Baghdad continues to withhold payment from the producing companies, said a spokesman for the Kurdistan Regional Government's (KRG) Ministry of Natural Resources today.

The KRG remains committed to the export target of 175,000 bpd contained in the 2012 Iraq budget and “could export significantly more” if the federal government honors its commitments to pay, the spokesman said.

“Because of the production costs and the re-investments needed by the producing companies in the region, the ministry has reluctantly decided to reduce exports to 50,000 bpd with a view to possible cessation in one month unless payments are forthcoming.

“Two payments totaling $514m (599bn IQD) were received in early 2011, the last being in May,” the spokesman said. “Ten months have now passed without payment.”

The spokesman added that the ministry's calculations show that the federal government now owes the KRG close to $1.5bn (1.7tr IQD).

“We still remain hopeful that the authorities in Baghdad will realize the damage being caused to Iraq’s economy by their continued failure to comply with their commitments,” the spokesman said.

Under a settlement reached in January 2011, pending the passage of federal hydrocarbon and revenue sharing laws, the federal government agreed to pay to the KRG 50 percent of export revenues from the region in order that the contractors recover their contractual entitlements. It was agreed that payments would be timely and regular.