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Foreign oil firms operating in Iraq’s Kurdistan Region have reacted positively to the latest developments in their payments, by announcing plans to increase upstream investment.
Although the new payment regime actually led the latest payments to fall, IOCs value the improved predictability and transparency, not to mention the fact that payments are now in line with contractual obligations. Of course, this assumes that the Kurdistan Regional Government (KRG) adheres to the payments’ system, which given the escalating political and economic problems it is facing (see p14) is far from assured.
The KRG announced on 1 February that IOCs will be paid according to the terms of their Production Sharing Contracts (PSC) rather than the flat rate they had been receiving since September (MEES, 5 February). The monthly payments also include a sum equivalent to five percent of the respective monthly netback revenue to help pay off receivables to IOCs that top $1.7bn.
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