Tuesday, September 8, 2009

Oil Companies Exporting From Kurdistan May Not Be Paid For Years

An executive from Talisman Energy of Canada said that companies exporting oil from Kurdistan might not be paid for years. In May 2009 it was announced that the two fields that were producing oil in Kurdistan, Tawke, operated by Norway’s DNO, and Taq Taq run by Turkey’s Genel Enerji and Canada’s Addax, could export their products. The Kurdistan Regional Government (KRG) agreed to deposit all of the profits with the central government in return for the right to sell its petroleum internationally. This was seen as a major breakthrough between Baghdad and the KRG who have been arguing over who has the right to explore, produce, and export oil for several years now. There continues to be one main sticking point however, Baghdad refuses to pay the companies, and the Kurds have not paid them either. The Talisman executive, whose company has begun exploration work in Kurdistan, told Reuters that at the earliest, Iraq could work out a payment deal after the January 2010 parliamentary elections. At the latest, he warned that it could take years. This could have a severe impact on the Kurds’ plan of creating their own independent petroleum policy. Unless the companies get paid, they will only agree to small-scale exploration and drilling work, because any larger investment will not be compensated. In the meantime, Baghdad is benefiting because the extra revenue is going into its coffers at no cost.


SOURCES

Bergin, Tom, “UPDATE 1-Iraq may not pay for Kurdish oil for years-exec,” Reuters, 9/8/09

Ciszuk, Samuel, “No clarity on Iraq-KRG oil export flap,” Iraq Oil Report, 5/13/09

Ibrahim, Waleed, “UPDATE 4-Kurds say will launch oil exports, Iraq denies,” Reuters, 5/8/09

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