KRG nets $4.5bn in oil sales for 2019: auditor

ERBIL, Kurdistan Region – Auditing giant Deloitte said on Saturday that the Kurdistan Regional Government (KRG) sold crude oil and condensate worth more than $8.3 billion in 2019, up from 2018’s $7.75 billion.

After fees, debt repayments, licensing agreements, payments to oil producers, and other costs are deducted, the KRG in 2019 netted just over $4.5 billion in sales, equal to 2018’s $4.5 billion net.

“Net cash balance received by the KRG for sales and related activities [was] 4,515,421,625 USD” in 2019, the report said.

The KRG exported and consumed a total of 170,977,784 barrels from January 1 to December 31, Deloitte added. 

Of this, 160,306,283 barrels were exported via the KRG’s pipeline through Turkey, 564,476 sold to local refineries for domestic use, and another 1,369,581 barrels went to local sales.

“Gross value of crude oil and condensate sold (piped exports and local sales) [was] 8,438,601,300 USD,” the report said.

“Average price per barrel achieved for oil sold [was] 52.676 USD/bbl,” it added.

The KRG welcomed the report and said it is “pleased” to confirm the Deloitte report as part of its efforts to established “transparency” in oil and gas sector.

The KRG’s “Regional Council for Oil and Gas Affairs will continue its efforts to develop enrich the auditing and revising reports which depends on reservations from relevant sides including the international community,” it said.

The KRG would also like to “reiterate its commitment to the people of the Kurdistan Region in which the Deloitte company’s work for an independent auditing of the oil and gas sector including all the processes and sectors, will continue.”

The numbers are unlikely to look as rosy for 2020, however, as the first months of the year have seen a catastrophic fall in global oil prices.

The KRG has agreed to cut production in line with Iraq and other OPEC members to salvage the price. 

Iraq’s oil revenues fell by almost half in April compared to March in a second consecutive month of losses, according to oil ministry figures published Friday.

The numbers do not bode well for Iraq, which depends on oil revenues for roughly 90 percent of its annual budget. Less money for the federal budget means a potentially smaller share for the KRG. 

The global collapse was sparked by a standoff between oil producing rivals Saudi Arabia and Russia and a worldwide decline in demand for fuel under the coronavirus lockdown.

For years, the oil giants coordinated their production benchmarks through a deal known as OPEC+. 

When global demand began to shrink as a result of the outbreak, Saudi Arabia proposed cutting production to stabilize the price.

Russian oil companies, struggling to find buyers under US sanctions, refused to cut production. Saudi Arabia responded by flooding the market with cheap oil to strong-arm the Russians.

For smaller oil producing nations like Iraq, the standoff has proved disastrous. Already locked in a political crisis and battling an outbreak of coronavirus, Iraq will now be forced to borrow or spend its foreign reserves to keep its head above water.

Moscow and Riyadh reached a deal on April 12 to cut oil production by 9.7 million bpd – equivalent to 10 percent of the world’s daily supply – for May and June. Global demand will remain low, however, as a result of the pandemic and the economic downturn it has sparked.

OPEC producers and allies agreed to continue the reduction until April next year. 

Iraq and the Kurdistan Region have pledged to adhere to the agreement.

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