Iraq’s Kurdistan Regional Government (KRG) said on Monday that it would start to pay revenue from crude oil sales to companies operating in the region.
Ministry of Natural Resources announced on its web site “From September 2015 onwards, the KRG will on a monthly basis allocate a portion of the revenue from its direct crude oil sales to the producing international oil companies.”
The ministry also added that it expects exports to rise in early 2016 and accordingly that the KRG will make additional revenue available to international oil companies.
The KRG’s announcement is seen as an attempt to comfort foreign oil companies operating in the region. Companies welcomed the news positively and their shares jumped following the statement.
While Norwegian oil firm DNO rose 26 percent, other producers including Gulf Keystone and Genel Energy rose 14 and 10 percent respectively at 1115 GMT.
The KRG said it is still determined to build on a 2015 budget deal with the central government in Baghdad, under which it agreed to transfer up to 550,000 barrels a day to Iraq’s State Oil Marketing Organization (SOMO). In exchange, the regional government expects Baghdad to allocate 17 percent of the country’s budget payments to Erbil.
According to shipping data and traders, direct crude sales via Turkish port of Ceyhan reach at least 12 million barrels since mid-June. However, the KRG said this is below Kurdistan’s share of the federal budget, but higher than the monthly allocation it had received from the central government.