KRG secures higher oil pre-payments

LONDON, March 1, 2017 – The Kurdistan Regional Government (KRG) and its Ministry of Natural Resources (MNR) have concluded talks with international parties on increased pre-financing of oil exports, Dr Ashti Hawrami said late on Tuesday.

Borrowing was increased to some USD 3 billion, the minister of natural resources told Reuters, with the semi-autonomous region having been granted grace periods of between 3 and 5 years for repayment.

“This helps our economic independence although it is important to understand that this cannot be achieved just by oil revenues and higher oil prices. We also need to press on with our economic reforms,” Hawrami was quoted as saying.

Last month, Rosneft became the first oil major to enter into a pre-financing agreement with the KRG. Commodity traders have been granting loans secured by future oil exports for some time, but only Glencore has publicly acknowledged such deals.

“It strengthens our fiscal situation. It means we can pay more regularly to the international oil companies working in Kurdistan and we can invest some money in expanding our oil infrastructure,” the minster also said, adding that the KRG and the MNR were working to avoid a repeat of delayed payments and the accumulation arrears.

Investments are to be directed towards increasing the Kurdistan Region’s pipeline export capacity and overhauling the pumping stations to keep up with greater flows.

The federal government, known for having pursued legal action against buyers of crude exported from the Kurdistan Region, has yet to comment in detail.

“We didn’t hear any negative comments from them [Baghdad] after the deal with Rosneft. They know we are selling our oil. And actually if we help each other rather than hindering progress, we can both achieve better prices as buyers will not be able to seek unreasonable discounts,” Hawrami pointed out.

He also said there is an agreement with the federal government that both parties honour. “We have real cooperation and we hope to build on that.”

Having redrawn the Kurdistan Region’s available acreage following a host of relinquishments over the past two years, the KRG and the MNR are now looking to put 20 blocks up for bid.

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