Iraq to pay remaining arrears

BASRA, March 4, 2016 – Iraq will pay its outstanding debt to international oil companies (IOCs) in April, the country’s deputy minister of oil, Fayadh al Nema, announced on Friday, saying there was some USD 2 billion in arrears left for 2015.

The Iraqi oil and gas industry is governed by a technical services contract model including a fixed-fee-per-barrel system, the latter of which weighs heavily on the country’s budget as it does not take into account the drop in oil prices.
Al Nema said negotiations with the IOCs on contractual revisions should be concluded by mid-2016. “The new amended agreement will help to prevent inflating production costs and getting Iraq in debt,” Reuters quoted Al Nema as saying.
According to the deputy oil minister, one of the cost-cutting measures will include mandating the state-run Iraqi Drilling Company take over drilling operations and increasing local content.

 

By mid-2016, Iraq also hopes to have reached an agreement with PetroChina and ExxonMobil on the Integrated South Project, a multi-billion-dollar venture that calls for the construction of pipelines and storage facilities and the injection of seawater. The project will initially target the Artawi, Luhais, Nahr Bin Umar, Nasiriyah and Tuba fields.

Al Nema also said the ministry was working on a similar venture with BP in Rumaila, where it hopes to rehabilitate and upgrade the Garmat Ali-based water injection facility, raising capacity from 1 million barrels of water per day to 3 million.

For more news and features on Iraq, click here. 

Read our latest insights on: