Gulf Keystone Petroleum and Genel Energy – the oil group run by former BP chief executive Tony Hayward – have welcomed an deal between Baghdad and the Kurdistan Regional Government that has enabled them to receive $40m in overdue export revenues.
Under the terms of the agreement, which was stuck between the KRG and Iraq’s prime minister on Tuesday, the regional government will provide 250,000 barrels of oil equivalent per day to Iraq’s federal oil marketing agency. In addition, the KRG will allow the export of an additional 300,000 boed from Iraq’s Kirkuk oilfields, by pipeline to Turkey.
In return, Baghdad has agreed to release funds to help the KRG’s Peshmerga fighters, and resume its regular payments to the regional government.
As a result, the KRG has been able to start paying some of the monies it owes to oil companies operating in the region, for exporting their oil.
On Tuesday, Genel confirmed that it had received $24m of monies owed for oil exports from its Taq Taq field, via a recently constructed pipeline from Kurdistan to Turkey.
News of the payment came a day after Gulf Keystone received a partial payment of $15m for truck shipments of oil to Turkey, which it had started making at the beginning of the year.
Gulf Keystone said it looked forward to “the establishment of a pattern of regular payments for export crude sales” following a commitment last month from the KRG to transfer sums owed to oil companies operating in the region.
Three weeks ago, Genel estimated that it was owed $180m in back payments by the KRG, while Gulf Keystone put its own figure at about $250m.
Shares in Genel rose by 10 per cent to 705.5p following news of the agreement, while shares in its smaller peer Gulf Keystone jumped 7.5 per cent to 69.9p.
Shares in DNO, the Oslo-listed company which is partnering Genel at its Tawke oil and gasfield in the region, also rose by 14 per cent to NKr18.
If all parties adhere to the Iraq-KRG deal, it will help to ease the financial strains placed on the regional government by the need to fight Isis Islamist insurgents in northern Iraq and accommodate refugees.
This strain has been exacerbated by the freezing of payments from Baghdad under a stalled revenue-sharing agreement – which constrained the KRG’s ability to pay oil companies for their production.