Kurdistan Oil & Gas Development

[Anthea]

Iraq Approves Budget Amendment

for KRG Oil Compensation

The Iraqi Council of Ministers, led by Prime Minister Mohammed Shia’ al-Sudani, approved a proposal on Tuesday to amend Article (12/B2/C) of the Tri-Year Budget Law No. 13 of 2023

The amendment addresses the compensation of the Kurdistan Regional Government (KRG) for the costs related to the production and transportation of oil produced in the Kurdistan Region, which is owned by Iraq’s State Organization for Marketing of Oil (SOMO).

The key points of the approved proposal include compensation for the KRG’s primary expenses incurred in the production and transportation of oil produced in the Region and delivered to SOMO or the Federal Ministry of Petroleum.

This compensation will apply to oil as per paragraphs (a) and (b) of Article 12/B2. The cost of production will be deemed fair, and the transportation of oil will be assessed separately by a specialized international technical advisory body. This body will be appointed by the Iraqi Ministry of Oil in coordination with the KRG’s Ministry of Natural Resources within 60 days of the law’s enactment.

The advisory body will estimate the cost of oil production and transportation, submitting its findings to the Ministries of Oil, Finance, and the KRG. These findings will be used to amend the law and determine the compensation for the KRG. The compensation will be based on the number of barrels per day the KRG delivers to SOMO or the Iraqi Ministry of Oil.

Under the proposal, the oil produced in the Kurdistan Region will be delivered directly to SOMO or the Iraqi oil ministry. The KRG will receive a payment of $16 per barrel for the production and transportation costs, to be provided by the Federal Ministry of Finance.

The completion of technical consultations and the finalization of these arrangements will mark a significant step in resolving financial and oil-related disputes between the Iraqi federal government and the KRG.

https://www.basnews.com/en/babat/865658

[Anthea]

PM Barzani, UK Envoy Stress Urgent Need

to Resume KRG Oil Exports

Kurdistan Region Prime Minister Masrour Barzani on Wednesday met with UK Ambassador to Iraq Steven Hitchen to discuss key regional issues, including the resumption of oil exports from Kurdistan

In a statement from PM Barzani’s office, the discussion covered preparations for forming a new cabinet in the Kurdistan Regional Government (KRG), as well as broader political dynamics in Iraq and the Middle East.

The British ambassador commended the Kurdistan Region’s peaceful and organized conduct of its sixth parliamentary elections and congratulated the prime minister on the success of the process.

Both parties emphasized the urgency of forming a new government swiftly. PM Barzani, who also serves as the KDP’s vice president, affirmed his party’s stance on fostering an inclusive, strong, and unified government based on election results, stating that the KDP does not hold a veto on any party’s participation.

Following the meeting, PM Barzani shared a statement on Facebook, noting the UK’s support for the electoral process and stressing the need for accelerated government formation. “We aim to establish a government that reflects the election results and represents the voices of all participating forces,” he wrote.

Additionally, the discussions highlighted securing financial entitlements for the Kurdistan Region and the critical importance of resuming oil exports, which have been a major factor in the Region’s economic stability.

https://www.basnews.com/en/babat/865744

[Anthea]

Erbil, Baghdad Oil Agreement

New Agreement Paves Way for Full Budget Allocation to Kurdistan

Dr. Sabah Subhi, an Iraqi parliamentary oil and gas committee member, shed light on the latest development between Erbil and Baghdad, which could ensure the Kurdistan Region’s full budget allocation from Baghdad.

According to Kurdistan Regional Government (KRG) spokesperson Peshawa Hawramani, Prime Minister Masrour Barzani has maintained regular communication with Iraqi Prime Minister Mohammed Shia' al-Sudani to ensure the prompt resumption of Kurdistan’s oil exports.

Hawramani emphasized that oil companies are essential stakeholders in the export process due to existing contracts with the KRG. The spokesperson noted the importance of resolving Kurdistan’s oil agreement with Baghdad to stabilize ongoing discussions.

Subhi stated that Article 12 of Iraq’s 2024-2023 budget law aims for unified oil exports across Iraq, including Kurdistan, while proposing a $16 export fee per barrel for Kurdistan’s oil to facilitate exports through Iraq’s SOMO oil company.

If this article is implemented, Subhi clarified, a neutral international organization would oversee compliance, and Kurdistan’s oil revenue would be managed according to SOMO’s regulations. The law is set for parliamentary review next week and requires approval from the Finance and Energy Committees.

“The new arrangement would enable Kurdistan to receive its full budget from Baghdad, including additional revenues from oil, customs, and federal allocations,” said Subhi

https://www.basnews.com/en/babat/865824

[Anthea]

Dana Gas committed to resuming gas expansion

UAE-based Dana Gas on Friday said it is committed to resuming a natural gas expansion project in the Kurdistan Region following the termination of a contract with a major supplier

In a report detailing its financial results for the first nine months of this year, Dana Gas said that it and its consortium Pearl Petroleum “are fully committed to safely and efficiently resuming the KM250 project,” referring to an expansion of Khor Mor field in Sulaimani’s Chamchamal district that aims to increase gas production by 250 million standard cubic feet of gas per day in under two years.

“Looking ahead, we are working diligently towards resuming full construction activities on our KM250 project, and our focus remains firmly on delivering the first commercial gas by Q2 2026,” said Dana Gas CEO Richard Hall.

In September, Dana Gas began legal proceedings against Enerflex, a gas industry supplier, over performance issues it claimed led to delays at the KM250 project.

In response, Enerflex accused Dana Gas of wrongfully terminating their contract and blamed security concerns at the site that forced them to suspend operations. It said that Dana Gas made “a wrongful attempt … to circumvent Enerflex’s contractual rights to suspend performance while the project site remains unsafe.”

After terminating the contract with Enerflex, Pearl Petroleum has taken over direct control and construction will begin “imminently,” Dana Gas said on Friday.

The Khor Mor gas field produces over 500 million standard cubic feet of gas per day, according to Dana Gas. The field serves as the primary gas supplier for the Kurdistan Region's power plants.

In its earnings report, Dana Gas said it generated a net profit of $112 million in the first nine months of this year, down from $126 million in the same period the year before. It attributed the drop to “lower realized prices and production decline in Egypt.”

The company said its continued focus on driving cost and production optimization, mainly in the Kurdistan Region, minimized “the financial impact of these challenges.”

Its overall production between January and September declined by eight percent compared to the same period last year, but its production in the Kurdistan Region increased by three percent.

https://www.rudaw.net/english/kurdistan/081120242

[Anthea]

Proposal to facilitate Kurdish oil exports

Oil producers in Kurdistan on Thursday welcomed a proposal to amend an article from the Iraqi federal budget law aimed at resuming the Region’s oil exports

“APIKUR member companies welcome the Iraqi Parliament’s proposal to amend Article 12 of the Budget Law,” read a statement from the Association of the Petroleum Industry of Kurdistan (APIKUR) on X.

Last week, the Iraqi government approved a proposal to amend articles from the federal budget to authorize compensation to companies operating in the Kurdistan Region for oil production and transportation costs, setting the rate at $16 per barrel. The proposal - yet to be finalized by parliament - aims to resume oil exports from the Region.

Iraq’s three-year federal budget bill, passed in June 2023, had set the rate for one barrel of oil at $6.90 and international oil companies (IOCs) have requested three times that amount.

According to Article 12 of the federal budget law, the Kurdistan Regional Government (KRG) is obliged to hand over the non-oil revenues to the federal government, in return for the Region’s share in the budget.

Despite the government’s proposal to amend the articles, APIKUR believes “that there could be sufficient scope in the current wording to cover our previous requests related to commercial terms and surety of payment for past and future exports via the Iraq-Türkiye Pipeline.”

Oil exports from the Kurdistan Region through the Iraq-Turkey pipeline have been suspended since March 2023 after a ruling by a Paris-based arbitration court ruled in favor of Baghdad over Ankara, saying the latter had breached a 1973 pipeline agreement by allowing Erbil to export oil independently since 2014.

Before the halt, Erbil exported around 400,000 barrels per day through the pipeline, in addition to some 75,000 barrels of Kirkuk’s oil.

The KRG signed production-sharing contracts with international oil companies when it began its independent oil sector.. Under this model, the oil companies cover the entire cost of production while the KRG receives the lion’s share of the profits from successful projects.

Baghdad has repeatedly said that these contracts violate the constitution and must be amended to match the service contracts that the federal government prefers before exports can resume.

Setting a standardized cost per barrel has also been a point of contention between Erbil and Baghdad.

In late September, the finance committee of the Iraqi parliament and the KRG reached an initial agreement to review the Kurdish government’s contracts with international oil companies, with the goal of restarting oil exports

https://www.rudaw.net/english/business/14112024

[Anthea]

APIKUR Supports Restart Kurdistan Oil Exports

The Association of the Petroleum Industry of Kurdistan (APIKUR) on Thursday expressed optimism over the Iraqi Parliament's proposal to amend Article 12 of the Budget Law, viewing it as a possible path to restarting the Kurdistan Region’s oil exports through the Iraq-Turkey Pipeline (ITP)

In a statement, APIKUR member companies praised the proposal, noting that the amendments address long-standing industry requests for favorable commercial terms and secure payment mechanisms for both historical and future exports. APIKUR underscored that these guarantees are crucial for ongoing collaboration and the Region’s economic stability.

"We are prepared for constructive discussions with both the Government of Iraq and the Kurdistan Regional Government to finalize necessary agreements," APIKUR stated, emphasizing the importance of clarifying certain provisions within the law to facilitate oil exports through the ITP.

APIKUR also aligned with statements from Iraqi Prime Minister Mohammed Shia' al-Sudani and Kurdistan Region Prime Minister Masrour Barzani, both of whom have highlighted the mutual economic benefits of resuming exports. APIKUR noted that a timely agreement would bolster revenue flows and strengthen Iraq's energy sector.

Restoring oil exports through the ITP is a priority, promising economic gains for both Iraq and Kurdistan as officials work towards resolving essential export framework issues.

https://www.basnews.com/en/babat/866520

[Anthea]

Oil Exports to Resume Next Year

The Kurdistan Region's acting Minister of Natural Resources has said that he expects oil exports from Kurdistan to resume early next year, with the cost of each barrel in the first phase set at $16

On Tuesday, November 19th, Kamal Mohammed, the acting Minister of Natural Resources for the Kurdistan Regional Government (KRG), stated that the halt in Kurdistan’s oil exports has caused the Iraqi treasury to lose more than $1 billion each month, amounting to about $20 billion so far due to the suspension of exports through the Turkish port.

"In the past, the Kurdistan Regional Government signed several agreements with the Iraqi federal government to restart oil exports," Mohammed said. "However, a clause in the Iraqi budget law regarding the cost of extracting and transporting oil from the Kurdistan Region was set at $6 per barrel. This point of dispute prevented the agreements from being implemented and delayed the resumption of oil exports."

He added, "The parties have now agreed to amend the budget law and increase the cost of oil extraction and transportation to about $20.6 per barrel. In the first phase, approximately $16 will be paid to international companies."

"We have also agreed with the federal government that, after the amendment of the budget law, an impartial international consulting company will audit the cost of oil extraction and export. The company will be given 60 days to determine the actual cost," he noted.

The acting minister expressed confidence that the Iraqi parliament would not block the approval of the amendment to the production and export costs for Kurdistan oil, explaining: "An agreement has been reached between the political parties for this purpose."

Mohammed expects the amendment to be approved by the end of this year, with preparations completed and oil exports from the Kurdistan Region resuming early next year.

"The oil will be exported through the Ceyhan Oil Pipeline. Iraq has two other pipelines—one to Jordan and one to Syria—but neither are operational. It has been agreed to export through Turkey," the minister concluded.

Crude oil exports from Kurdistan’s fields and from the Kirkuk province to Turkey via Ceyhan have been suspended since March 25, 2023, following a ruling by the International Court of Arbitration in Paris, which deemed these exports illegal.

https://www.basnews.com/en/babat/866896