ECONOMY
The sun sets as flare stacks burn off excess gas at the Mushrif site inside the Zubair oil and gas field, north of the southern Iraqi province of Basra, on July 13, 2022. Photo: Hussein Faleh/AFP
ERBIL, Kurdistan Region - A petroleum association on Sunday called on both the Iraqi federal government and the Kurdistan Regional Government (KRG) to honor the contractual rights of the international oil companies (IOC) and ensure they are accounted for in the implementation of the budget and future hydrocarbon laws.
Delegations from the Iraqi oil ministry and the KRG have held meetings in recent weeks aimed at reaching a consensus on the final draft for the country’s much-needed hydrocarbon bill before it is presented to the Council of Ministers.
The Association of the Petroleum Industry of Kurdistan (APIKUR), which includes international oil and gas companies that are directly or indirectly involved in the production of the Kurdish oil, said that the implementation of the newly-passed Iraqi budget and the proposed oil and gas bill should guarantee the IOCs rights to cost recovery and share of profits.
“It is essential to the future of the industry in these regions, and the many jobs it supports, that the outcome of the negotiations include the cost recovery and profit to which the IOCs are entitled under existing Production Sharing Contracts (PSCs),” read the statement.
Under the Kurdistan Region’s PSC model, the IOCs cover the entire cost of production while the KRG receives the lion’s share of the profits from successful projects.
Iraq passed its highly-contentious federal budget in June after months of discussions. The budget law obliges the KRG to sell 400,000 barrels of crude oil through Iraq’s national oil marketing body and if the suspension continues, Iraq will take Kurdish oil for its internal use.
APIKUR said that the KRG would be reliant on the IOC production to achieve the number specified in the budget.
Calls for drafting a joint hydrocarbon law between Erbil and Baghdad have resurfaced since the formation of the new Iraqi government under Sudani in October, after a ruling from Iraq’s top court in February 2022 deeming the Kurdistan Region’s oil and gas law “unconstitutional” escalated tensions between the KRG and the federal government.
The Kurdistan Region's oil exports through Turkey's Ceyhan port are yet to resume after being put on hold in late March following a ruling from a Paris-based arbitration court saying that Ankara had breached its 1973 pipeline agreement with Baghdad.
Delegations from the Iraqi oil ministry and the KRG have held meetings in recent weeks aimed at reaching a consensus on the final draft for the country’s much-needed hydrocarbon bill before it is presented to the Council of Ministers.
The Association of the Petroleum Industry of Kurdistan (APIKUR), which includes international oil and gas companies that are directly or indirectly involved in the production of the Kurdish oil, said that the implementation of the newly-passed Iraqi budget and the proposed oil and gas bill should guarantee the IOCs rights to cost recovery and share of profits.
“It is essential to the future of the industry in these regions, and the many jobs it supports, that the outcome of the negotiations include the cost recovery and profit to which the IOCs are entitled under existing Production Sharing Contracts (PSCs),” read the statement.
Under the Kurdistan Region’s PSC model, the IOCs cover the entire cost of production while the KRG receives the lion’s share of the profits from successful projects.
Iraq passed its highly-contentious federal budget in June after months of discussions. The budget law obliges the KRG to sell 400,000 barrels of crude oil through Iraq’s national oil marketing body and if the suspension continues, Iraq will take Kurdish oil for its internal use.
APIKUR said that the KRG would be reliant on the IOC production to achieve the number specified in the budget.
Calls for drafting a joint hydrocarbon law between Erbil and Baghdad have resurfaced since the formation of the new Iraqi government under Sudani in October, after a ruling from Iraq’s top court in February 2022 deeming the Kurdistan Region’s oil and gas law “unconstitutional” escalated tensions between the KRG and the federal government.
The Kurdistan Region's oil exports through Turkey's Ceyhan port are yet to resume after being put on hold in late March following a ruling from a Paris-based arbitration court saying that Ankara had breached its 1973 pipeline agreement with Baghdad.
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