Kurdistan Regional Government replaces interim payments

The Kurdistan Regional Government announced Monday it would adjust its 2016 payments to international oil companies, making sure they “reflect the revenue derived from each producing field on a netback basis.”

With payments henceforth based on the contractual entitlements under the production-sharing contracts, the system replaces the interim payments that began in September 2015. In order to further incentivise international oil companies to increase capital expenditure and raise production, the regional government will also make additional payments “equivalent to 5% of the respective monthly netback revenue derived from each field,” the statement posted on the website of the Ministry of Natural Resources said.

Companies have been putting off investments in raising output from their respective fields. In January 2016, Gulf Keystone CEO Jón Ferrier told TOGY that while the company intends to increase production in line with the Shaikan phase 1 field development plan target of 110,000 barrels of oil per day, it would “only be possible with the continuation of the regular payment cycle for all oil sales and arrears.”