Page 6 - MEOG Week 28 2021

MEOG PERFORMANCE MEOG

Iraq seeks northern output

increase as Erbil receives advance

IRAQ IRAQ’S Oil Minister this week spoke of Bagh- Budget payment
dad’s desire to see the state-owned North Oil With financial strain rarely out of the head-
Co. (NOC) increase oil production from fields lines in Iraq, good news came by way of reports
around Kirkuk near the semi-autonomous from Iraq confirming the transfer of IQD200bn
Kurdistan Region of northern Iraq. ($138mn) to Erbil from Baghdad.
Meanwhile, Baghdad transferred the first The payment was anticipated, though accord-
funds to the Kurdistan Regional Government ing to a late June statement by Iraqi Prime Min-
(KRG) since the 2021 budget was agreed in late ister Mustafa al-Kadhimi, the funds represent
March. an advance to the Kurdistan Region in order to
During a visit to NOC’s headquarters, Oil pay the salaries of its citizens. This means that
Minister Ihsan Abdul Jabbar said that the Min- Erbil is still waiting to receive its share of the 2021
istry of Oil (MoO) was working to address tech- budget as challenging discussions remain ongo-
nical, economic and security issues as swiftly as ing between the governments relating to oil sales,
possible in order to facilitate a sustainable oil despite the budget having been approved more
production increase. than three months ago.
He added that this would include continued In late March, the Iraqi Cabinet passed an
co-operation with IOCs. agreement pegging the 2021 budget at IQD130
The bulk of NOC’s output comes from Baba trillion ($89.65bn) with deficit estimated at
Gurgur, Bai Hassan and the Kirkuk oilfield’s IQD28.7 trillion ($19.79bn). With the country
Avana Dome, which together produce around 97%-reliant on oil exports, the budget is based on
370,000 barrels per day (bpd). an oil price of $45 per barrel, with total exports
In early May, Islamic State (IS) militants averaging 3.25mn bpd. After numerous voting
claimed responsibility for detonating explosives delays and heated exchanges between political
targeting wells 177 and 183 at Bai Hassan, and factions, agreement was reached on major stum-
while oil production was not affected, the attack bling blocks, predominantly the KRG’s revenues
led to “the martyrdom and wounding of a num- from oil exports and non-oil revenues including
ber of security forces and energy police”, accord- customs fees and taxes.
ing to the MoO. As in previous budgets, the KRG will receive
Abdul Jabbar urged for a focus on sharpen- 12.67% of the total, with this contingent on it
ing investments to increase gas production as the handing over the net revenues from 250,000 bpd
country looks to reduce flaring while monetising of oil exports to Iraq’s state oil marketer SOMO
gas associated with oil production. and giving the revenues to the central treasury.
Several weeks earlier, the MoO had said that Kurdish oil exports have long been seen by many
“the administration of the Basra and the South in Baghdad as unconstitutional and in late Janu-
Oil companies and the relevant departments in ary, 113 MPs, most of them Shi’ite, wrote to the
the Ministry are putting the final touches to the head of the parliament to ask that budget article
proposed project scheduled to be signed in the 11 be redrafted to force Erbil to provide all out-
upcoming period.” put to SOMO.
Abdul Jabbar noted that these “projects are It suggested that section 2a of article 11
a priority in the Ministry’s plans for an opti- should read: “The Kurdistan region will abide by
mal investment of flared gas and upholding the sending 460,000 barrels of oil per day to SOMO,
infrastructure.” and in case of overproduction, they abide by
He urged partner companies to double down sending the excess amount to SOMO as well.”
on efforts to firm up contract terms as Baghdad While the KRG was never likely to agree to this,
looks to increase the availability for feedstock to Erbil has committed to a minimum production
produce power. level of 460,000 bpd.™

P6 www. NEWSBASE .com Week 28 14•July•2021