Kurdistan oil exports ramping up, says ministry

The Kurdistan Regional Government (KRG) plans to increase oil exports through the Kurdistan crude oil pipeline to Turkey to 400,000 b/d by yearend and 500,000 b/d by the end of first-quarter 2015, reports the Iraqi region’s Ministry of Natural Resources (MNR).

Flow rates through the Kurdistan crude pipeline to Turkey have increased to 300,000 b/d in the first week of November from 185,000 b/d in August. KRG says it remains on track to meet its production target of 1 million b/d by yearend 2015 or early 2016.

Production has picked up in recent months despite the region’s civil unrest (OGJ Online, Aug. 21, 2014). Most recently, Gas Plus Khalakan Ltd. (GPK) declared commercial the Shewashan light oil discovery on the Khalakan block (OGJ Online, Oct. 17, 2014).

Since January, 34.5 million bbl of oil have been exported from Kurdistan, of which 21.5 million bbl were sold through the Ceyhan pipeline. The balance was trucked to Mersin, Turkey.

The exported oil’s value totals $2.87 billion, of which $2.1 billion was received in cash and $775 million in-kind for 710,000 tonnes of products consisting of kerosene, benzene, and diesel.

“All proceeds from the sale of oil are treated as part of the KRG’s Constitutional entitlement to 17% of Iraq’s revenues and to 17% of Iraq’s refining volumes for domestic consumption,” the MNR said in a statement. “The revenue accounts for only a fraction of the KRG’s annual entitlement from Iraq’s 2014 budget, suspended by the federal government since January.”

Some $400 million from the cash payments has been used to pay both trucking costs and as part of payment to the oil producers. The net cash received by KRG during this period totals $1.7 billion. The KRG has also received an additional $500 million in prepayment from committed purchasers of crude against future deliveries of oil transported to Ceyhan.

KRG credits record levels of domestic production to international and domestic oil companies, and says it plans to an initial payment of $75 million on account to producers for exports, with further regular payments to follow. Further production increases will result in those companies receiving their full contractual entitlements.

“The KRG recognizes that, for the continuing growth of the Kurdistan oil industry, it is necessary that contractors receive payments in line with their contractual entitlements,” the statement said.

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