International Oil Contracts and KRG’s Strategic Position
International oil companies are urging the Iraqi government to uphold current contracts related to oil production in the Kurdistan Region, as the Iraqi Oil Ministry has committed to not amending these agreements. This assurance is crucial for maintaining the stability of operations in the region.
The Kurdistan Regional Government (KRG) has initiated discussions with both the Ministry of Oil and the Ministry of Natural Resources to address the roles of international oil companies within the region. This collaborative meeting aims to foster better alignment between the KRG and federal authorities regarding oil-related matters.
In a recent development, the Iraqi Oil Ministry assured international oil companies that their payments would be processed in cash or through alternative methods, as confirmed by a letter from the Ministry of Finance. This financial commitment is pivotal for sustaining operations within the Kurdistan Region.
Additionally, the meeting included discussions on the formation of a consultancy that will assess the cost of oil production in the area. The Iraqi Oil Ministry is advocating for an advisory party to ascertain the appropriate pricing of oil, though international oil companies have yet to commit to resuming production until there is clarity on these matters.
To streamline this process, the Ministry of Oil has proposed the establishment of two committees: one focused on selecting advisors and another dedicated to technical issues. Notably, the Ministry has agreed not to alter the existing consultancy partnership contracts, even within the context of the budget law, while evaluating the financial sector’s landscape.
The KRG’s Ministry of Natural Resources has emphasized that any oil output from international firms, whether sold domestically or exported, must incorporate a cost allocation of $16 per barrel. Although discussions surrounding loans were not explicitly addressed, Iraqi Oil Minister Hayan Abdul Ghani indicated that resolving the debt issue necessitates a political consensus between the Kurdistan Region and the federal government.
Furthermore, the Iraqi Oil Ministry has ruled out the possibility of advance payments to companies, stipulating a 30-day payment term post-production, extendable to 60 days if necessary.
Ultimately, the meeting concluded without a definitive agreement, and a report detailing the outcomes will be forwarded to Iraqi Prime Minister Mohammed Shia Sudani through the Iraqi Oil Minister.
