KRG repays over 600 million dollars in debt to oil companies

ERBIL, Kurdistan Region - The Kurdistan Regional Government (KRG) has repaid over $628 million in ‘previous debts’ to oil companies in the past six months, the KRG’s Department of Media and Information (DMI) said on Tuesday. 

The DMI added that the KRG had fallen in debt to International Oil Companies due to Baghdad not sending the Region’s share of the federal budget, but as a result of increasing oil prices and decreasing domestic spending, the KRG has been able to repay some of the debts.

In the past six months, the KRG says it repaid the debts of oil companies more than twice as much as it did in the first quarter of the year.  

Rudaw understands that the KRG owed between 1.6 to 1.7 billion dollars to the international oil companies operating in the Region in August.

The piled up debts mainly come as many of the contracts with international oil companies signed in the early stages of the KRG’s independent oil sales were signed with prepayment schemes, and the Kurdistan Region owes a large amount of money to those companies. This has made the region unable to pocket over 50 percent of its oil revenues at any point throughout the past eight years.

The KRG published its quarterly report, audited by Deloitte, which includes the government’s oil sales and income for the second quarter of this year. 

The government exported 37.6 million barrels of crude oil and sold 237 thousand barrels to local refineries between April 1 to June 30, revealed the report. 

The average price of a barrel of the exported oil was $100 while the KRG sold a barrel for $54 to local refineries. 

The KRG collected $3.8 billion in the sales, pocketing nearly $1.6 billion net amount after paying the financial entitlements of oil companies and debts as well as transportation and storing fees. 

The government made over $1.3 billion in oil sales during the first three months of 2022.  

The KRG reported a total net income of over $3.9 billion throughout 2021, having exported over 152 million barrels of oil.

The surge in oil prices in 2022 has helped the KRG to resume paying its civil servants in full and almost on time after years of financial crisis - blamed on the war against the Islamic State (ISIS) and disputes with Baghdad.