OSLO: Foreign oil producers in Iraqi Kurdistan are resorting to selling crude at about $30 a barrel in the domestic market as the government hangs on to companies’ export earnings amid weaker world prices.
“The government’s announcement was that there would be payments coming,” said Bijan Mossavar-Rahmani, executive chairman of Norwegian producer DNO ASA, said in an interview in Oslo. “That payment I think got disrupted because of lower prices and the resolution of the budget issues.”
That’s forcing DNO to increase sales to the local market.
“The companies cannot go on forever investing,” Mossavar-Rahmani said. “Local sales are an opportunity for us to get oxygen as we wait for those larger issues to come together.”
DNO, Genel Plc and Gulf Keystone Petroleum Ltd. received an initial $75 million from the Kurdistan Regional Government for their exports last year that was to be followed by a second payment. However, prices that have slumped by half in the past six months are squeezing income for the government at the same time as it’s battling Islamic extremists in northern Iraq.
“The biggest setback has been the crash of oil prices internationally because it limits the amount of revenue that can be shared,” the chairman said. “Had it not been for the oil crash, I think the situation would have been quite different. This squeezes everybody, governments and the companies.”
