Oil producers in Iraqi Kurdistan, including Gulf Keystone Petroleum and Genel, have started ramping up deliveries to the local market at the expense of foreign sales after months of unpaid export bills.
Gulf Keystone and its partner MOL said they had suspended all trucked exports of crude from the Shaikan oilfield.
“In order to maintain revenues and cash flow, Gulf Keystone will be recommencing crude oil supply for local Kurdistan use,” the company said in a statement.
Norway’s DNO, which operates the Tawke oilfield, made a similar announcement, saying it planned to ramp up deliveries to the domestic market in the first quarter.
A source familiar with Genel’s operations said the oil producer also planned to sell more crude from its Taq Taq field to the Kurdish market.
Oil producers across the globe are trying to deal with the financial consequences of a sharp decline in oil prices since last year’s peak in June.
The Kurdish Regional Government owes the region’s oil companies months’ worth of oil export payments. It has been catching up on such outlays since Iraq’s central government reinstated budget allocations to the autonomous authority late last year.
Arbil and Baghdad have been at loggerheads over the KRG’s claim to oil independence but reached a temporary agreement in December.
The KRG said in November it would make an initial payment of $75 million to oil-producing companies for their exports and conduct further payments on a regular basis.
“We remain confident that a stable payment cycle will be established in the near term, and we expect to receive payment for all past and ongoing oil sales from Shaikan (oilfield),” Gulf Keystone chief executive John Gerstenlauer said in a statement.
The oil company also said it was taking a “prudent approach” with capital spending in 2015, reflecting decisions by its industry peers to slash investment because of weak oil prices.
The company, which appointed oil and gas investment banker Sami Zouari as chief financial officer last month, said it was considering a number of long-term financing options.
Gulf Keystone shares were trading 12.4% lower, while Genel shares were down 1.9% and DNO was 7% lower.
Source: Trade Arabia