Kurdistan Regional Government pays energy companies for third month to keep pumps moving

The Kurdistan Regional Government paid international oil companies operating in the Iraqi autonomous region for a third consecutive month, disbursing funds that it said would allow production to be maintained.

Payments would improve when exports increase or the oil price rebounds, the KRG said. The government said the release of funds would be in line with those in September and October, which both saw disbursements of US$75 million.

Gulf Keystone Petroleum, Genel Energy and DNO were awaiting a November payment for the approximately 300,000 barrels a day they jointly produce. Initially shares of Gulf Keystone rose 2.3 per cent to 22 pence in London yesterday, while Genel advanced 2.6 per cent and DNO gained 1.3 per cent in Oslo.

However, Gulf Keystone’s shares dropped more than 9 per cent later in the day with its chief executive Jón Ferrier saying that the company was still awaiting the November payment.

He said that six months of payments were needed for “confidence to return”.

The KRG vowed to re-establish regular monthly payments in August, following an eight-month hiatus after disagreements with Iraq’s central government over how the region should be remunerated for its oil output.

“Any payment they make is encouraging but it’s not transformational,” said Shola Labinjo, a London-based analyst at Tudor, Pickering, Holt & Co.

The three companies are owed about $1.7 billion from past crude exports. Unless this is paid, an increase in crude production would not be possible, according to top executives at DNO, Genel and Gulf Keystone. The KRG earned $3.3bn from direct oil sales and received $1.98bn in shared export revenue from Iraq’s federal government this year, according to a report yesterday from the administration.

The announcement follows a ruling by a UK court ordering the KRG to pay $1.98bn to Dana Gas and two other energy firms in a dispute over development rights for two oil and gasfields in Iraq’s Kurdish region.

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