Deloitte: We noted no incorrect information on oil sales for KRG in 2017

ERBIL, Kurdistan Region –Deloitte has found no incorrect information on figures relating to the production, exportation and sale of oil in the Kurdistan Region during the last six months of 2017, but it did find a decrease in exports and net sales in the second half of the year given falling crude prices and the loss of Kirkuk.

 

Deloitte Company published its second auditing report on the production, uses and revenues of Kurdistan’s oil during July 2017 to December 2017.

 

Deloitte, a UK-incorporated multinational company headquartered in New York, is one of the ‘Big 4’ accounting firms in the world. The KRG signed a contract with Deloitte in late 2016 to audit the Kurdistan Region’s oil sales data.

 

Deloitte issued its first report on the Kurdistan Region’s oil production and revenues in January 2018. The report audited the oil production data from January 1, 2017 to June 30, 2017.

 

The report from August 1 audited data from the first six months of 2017 and concluded: “In terms of oil exportation, uses and sales, we noted no incorrect information on the exportation, uses and sales of oil during this period.”

 

The Deloitte Company has concluded the following in its second report:

 

1. We noted no incorrect information on the exportation and uses of oil;

 

2. We noted no incorrect information on oil sales.

 

According to Deloitte’s second report, in the last six months of 2017, the KRG produced 90,997,914 barrels of oil.

 

Out of the oil produced during this period:

 

-          81,548,972 oil barrels were exported via pipelines;

 

-          4,913,910 oil barrels were exported via tankers;

 

-          1,457,965 oil barrels were sent to refineries to be refined for the ministry of natural resources;

 

-          664,220 oil barrels were sold to refineries;

 

-          1,787,091 oil barrels in return for diesel heavy fuel for use in power stations;

 

-          625,756 oil barrels were sold internally.

 

According to the report, the Kurdistan Region’s oil sales peaked in September 2017, which was 18,283,930 oil barrels. This was the final month the Kurdistan Regional Government controlled Kirkuk’s oil fields, which the KRG have said comprised nearly half of their revenues at the time.

 

Oil sales dropped in October to 7,382,831 oil barrels due to October 16 events as the KRG was exporting over 300,000 oil barrels daily from Kirkuk oilfields via Kurdistan-Turkey pipeline.

 

KRG revenues from oil

According to Deloitte’s data, revenues from oil sales internally, via pipelines and tankers were $3,853,777,000 in the last six months of 2017. After the expenses, $1,815,410,000 was left for the government. During this period, the government received an advance oil sales payment of $183,825,000.

 

Government expenses in the oil sector during these six months were more than $2 billion. Of this amount, $624,998,000 was given to oil companies for their work, $938,178,000 was for the general expenses of the government, $3 0million was for Kirkuk’s petrodollar shares, $14,592,000 was the cost of protecting oil establishments, $518,169,000 was the cost of settling disputes via mediators.

 

According to the report published by Deloitte, the price of 1 barrel of oil sold via pipelines during these six months was $44.58, and the price of one barrel of oil sold via tankers was $39.88.

 

“The cost of exporting crude oil via tankers is more,” the report has said.

 

Comparing the revenues made in the first six months of 2017 with the last six months of 2017, Kurdistan’s oil production and revenues dropped in the last six months despite rising oil prices.

 

In the first six months of 2017, the KRG sold 110,852,000 barrels of oil, the overall price of one barrel of oil sold via pipelines was $41.29, and the overall price of one barrel of oil sold via tankers was $25.45.

 

In the first six months of 2017, the revenues made from oil sales were $4,069,634,000. Of this amount, $2,076,102,000 was left for the KRG after the expenses were made.

 

In the last six months of 2017, the KRG produced 90,997,914 barrels of oil and its revenues (excluding its expenses) were $3,853,777,000.

 

That is, in the last six months of 2017, the exportation and uses of Kurdistan oil dropped by 19,845,362 barrels, and the revenues dropped too by $215,856,480.

 

KRG oil figures provided by Deloitte on August 1, 2018.