Genel Energy, one of a handful of foreign oil producers in Iraqi Kurdistan, will resume drilling work at its Taq Taq oilfield in the coming weeks to ramp up production, its chief financial officer (CFO) told Reuters on Tuesday.
The restart of drilling work will mark the first time in more than a year that Genel has drilled in the region to increase output from its fields after the Kurdistan Regional Government (KRG) struggled to pay producers for oil exports.
“Drilling work will start imminently, in the next few weeks,” said Genel CFO Ben Monaghan on the sidelines of a conference.
“It’s a symbolic restart of our investments.”
Genel said last month it would invest $80-120 million this year in Iraqi Kurdistan, depending on export payments.
The oil producer is still owed more than $400 million by the KRG for oil exports, Monaghan said.
The push for more production comes despite a roughly 40 percent fall in oil prices over the past year to around $30 a barrel. Monaghan said Genel’s oilfields had a breakeven price of $20 a barrel.
The autonomous KRG government announced last month it would start paying oil producers according to the terms of their contracts, on top of a percentage of monthly netback revenue derived from each field to help them recover costs.
The new payment mechanism means that, although outright payments will fall, oil producers will have a more predictable outlook over their monthly oil export payments and the KRG will gradually clear its oil export debt.
The KRG had been making ad hoc monthly payments since September 2015 to help oil companies meet their running costs.
The Taq Taq oilfield has gross reserves of 541 million barrels of oil, according to Genel’s website.