Iraq building up debts to IOCs

BAGHDAD, March 12, 2015 – The Iraqi government has begun building up debts to foreign oil companies as a result of the decline in global oil prices, the Reuters news agency reported on Wednesday.

Under existing service contracts with companies such as Shell, BP and ExxonMobil, the government is obligated to provide these operators with volumes of oil based on a fixed dollar fee according to the amount of oil produced at a given field.

Iraq must now give operators roughly twice the amount of oil it was handing over in June, before the price slide.

Consequently, the government has begun handing over less oil than it is obligated to provide, instead selling its oil for cash, Reuters reported. Iraq faces strong budgetary pressures as it battles Islamic State militants in the country.

Also on Wednesday, Al Arabiya News reported that Iraq will be cutting its crude oil exports from its ports on the Arabian Gulf in April to 2.4 million barrels of oil per day, down from 2.65 million barrels per day in March.

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