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Iraq's Kurdistan Oil Payments at Risk Over Independence Tensions

  • Gulf Keystone, Genel, DNO, Shamaran got paid for summer sales
  • Investors need to watch post-referendum oil payments, RBC Says

Iraq’s Kurdish region handed over almost $80 million to foreign oil producers over the past two days, but future payments may be at risk.

Gulf Keystone Petroleum Ltd., Genel Energy Plc, DNO ASA and ShaMaran Petroleum Corp. reported payments from the Kurdistan Region Government on Thursday and Friday for sales of crude in July and August. Political tensions after the region’s independence referendum on Sept. 25 disrupted crude flows, meaning all eyes will be on payments for October and November, said Al Stanton, an analyst at RBC Europe Ltd.

“The referendum in September has really muddied the water,” Stanton said by phone. “The issue now is have we gone back effectively five years, where there is concern over the monthly payments?”

Foreign producers have previously suffered from irregular payments when oil prices slumped and KRG resources were drained by the fight against Islamic State terrorists. While the fortunes of the companies recovered as a rebound in crude markets replenished government coffers, the disruption to output around Kirkuk is weakening KRG finances, even as fields operated by Gulf Keystone, DNO, Genel and ShaMaran remain unaffected.

“The temptation would be to rein in the payments for the oil companies, once again while the overall revenues for the Kurdish Regional Government are constrained,” Stanton said. “The risks have increased.”

Northern Iraq’s crude exports to Turkish ports dropped last month by around 30 percent as Kirkuk shipments dried up, according to tanker-tracking data compiled by Bloomberg News. 

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