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The main IOCs operating in Iraqi Kurdistan finally received (almost) full payment for April crude oil sales this week. The Kurdistan Regional Government (KRG) points to continued payments as evidence of its commitment, and ability, to provide reliable payments, but significant concerns remain that are likely to hold up investment.
Payments to the IOCs were made in two tranches, with both falling outside the KRG’s self-mandated 10 working days after the end of the April timeframe. But even the last payment, on 2 June, left London-listed Gulf Keystone, the most cash-strapped of all, still owed $2mn.
The delayed payments, and irregular nature of the two-tranche system, underline the extent of the financial woes facing the KRG. Counterintuitively for a government reliant on oil revenues for more than 95% of GDP, rising oil prices are hurting the KRG’s short term finances.
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