The Kurdistan Regional Government paid international oil companies operating in the Iraqi autonomous region for a third consecutive month, disbursing funds that it says will allow production to be maintained.
Payments will improve when exports increase or the oil price rebounds, the KRG said Monday in an e-mailed statement. The government said the release of funds would be in line with those in September and October, which both saw disbursements of $75 million.
Gulf Keystone Petroleum Ltd., Genel Energy Plc and DNO ASA were awaiting a November payment for the roughly 300,000 barrels a day they jointly produce. Shares of Gulf Keystone rose 2.3 percent to 22 pence in London Tuesday, while Genel advanced 2.6 percent and DNO gained 1.3 percent in Oslo.
The KRG vowed to re-establish regular monthly payments in August, following an eight-month hiatus after disagreements with Iraq’s central government in Baghdad over how the region should be remunerated for its oil output. The collapse in crude prices and the cost of fighting Islamic State is making it harder for the KRG to balance its books.
urdistan is a major driver of Iraq’s record crude production this year, with the region exporting 644,978 barrels a day in November, according to estimates from the Kurdish Ministry of Natural Resources. That’s more than double the level it was shipping in January.
Lower oil prices and the conflict with Islamic State have been compounded by the collapse in the revenue-sharing agreement between Baghdad and Erbil, leading the KRG to pursue crude sales independently.
Liquidity and indebtedness remains a concern for investors in oil producers in Kurdistan. Yields on Gulf Keystone’s $325 million of convertible bonds maturing in October 2017 have widened to 90 percent from less than 30 percent in January, according to data compiled by Bloomberg.