 [Rudaw] As part of its continued energy sector audits, Deloitte announced on Wednesday that the Kurdistan Region Government (KRG) sold crude oil and condensate worth more than $2.26 billion in the third quarter of 2018 up from $1.84 billion in the previous quarter.
It had two findings.
"Oil export and consumption - We did not identify any misstatements in the 1 July 2018 to 30 September 2018 oil export and consumption data," stated Deloitte in their report.
The Kurdistan Region had a "gross value of crude oil and condensate sold (piped exports and local sales)" of $2,262,409,784 in the three-month period.
"Oil sales ‐ We did not identify any misstatements in the 1 July 2018 to 30 September 2018 oil sales data and the net amount received in the period by the KRG," added Deloitte.
Because of payments to other companies, licensing agreements, repayment of debts, payments to oil producers, among other costs, the KRG netted more than $1.3 billion ‐ $1,288,773,374 for sales and related activities, and $104,598,002 in additional advance payments made by buyers.
It averaged $63.098 per barrel of oil exported through the Ceyhan pipeline (totaling 35,246 851 barrels), and $67.734 for crude and condensate sold locally (totaling 174,761 barrels).
In the previous quarter, the KRG exported 30,190,384 barrels of oil through the pipeline.
An advisor to KDP President Masoud Barzani explained that the audits help in improving Erbil-Baghdad relations.
"It's an important issue between Iraq and the KRG," Masoud Haider, a former MP in the Iraqi parliament, told Rudaw English. "We hope that in 2019, with an open discussion ‐ all the issues, economic issues between the KRG and the federal government will be on the table and so on."
The audits are also a tool for the KRG when drafting contracts with foreign energy companies.
Deloitte was appointed to review the KRG's oil activities for 2014-2017 by the KRG's Regional Council for Oil and Gas Affairs.
The KRG welcomed the report.
"The Regional Council for Oil and Gas Affairs acknowledges the positive feedback received from stakeholders, including the international community, and reiterates its commitment to the people of Kurdistan that the two international audit firms, Deloitte and Ernst & Young, will continue to independently review the oil and gas sector, inclusive of all the streams," it stated.
Kurdistan prepared to send oil – if Baghdad meets obligations: KRG source
[Rudaw] Baghdad can expect to receive 250,000 barrels of oil per day from the Kurdistan Regional Government (KRG) if it meets its own commitments to pay the Region’s civil servants, repays debts to oil firms, and supplies an adequate budget, a KRG source told Rudaw.
Prime Minister Nechirvan Barzani and Deputy Prime Minister Qubad Talabani are taking part in a meeting of the KRG’s oil and gas committee to discuss the budget, oil, and economic relations between Erbil and Baghdad, the source said.
"The Kurdistan Region is prepared on condition to send 250,000 oil barrels to Baghdad daily," the source told Rudaw, provided "Baghdad too is prepared to send salaries of Kurdistan Region employees, is committed to paying off the debts owed to oil companies, and dedicate functional budget."
KRG Finance Minister Rebaz Hamlan will present a report about the Region’s expenses and revenues, and Minister of Natural Resources Ashti Hawrami will present a report on its oil revenues, Rudaw has learned.
The meeting will also cover the agreement between the Kurdistan Region and Baghdad on the budget, civil servant salaries, and Kurdistan Region oil exports.
Independent oil exports by the KRG have always been a sticking point in relations between the central and regional governments. Tensions boiled over in 2014 when the Iraqi government cut the region’s budget share.
The KRG has argued it can sell its oil according to the Iraqi constitution, while Iraq argues oil sales are a strictly federal matter. The vague, inconclusive nature of the issue stems from the document’s writ.
Article 111 of the constitution stipulates that oil and gas are owned by Iraqis "in all the regions and governorates". Article 112’s first and second sections provide vague detail.
In the first section, the federal government "shall undertake the management of oil and gas extracted from present fields" with the producing governorates and regional governments, and for the revenues to be distributed proportional to population in a "fair manner."
The second section of the document agreed upon in 2005 stipulates that the federal government, with the producing regional or governorate governments, "shall together formulate the necessary strategic policies to develop the oil and gas wealth". The two articles are vague and both governments have interpreted it differently.
This has led to crippling financial crises, coupled with a drop in oil prices, and the onset of the costly war against ISIS. The KRG had to slash the salaries of its public employees.
However,
some people cause happiness wherever they go; others whenever they go...
after the events of October 2017, Iraq agreed to send 317 billion Iraqi dinars ($266 million) to supplement the loss of the Region’s oil revenues to pay public servants.
Under the administration of current Iraqi Prime Minister Adil Abdul-Mahdi, relations have improved. The 2019 budget is soon to be implemented.
The new budget bill has a protection for civil servants in the Kurdistan Region. No longer will their salaries be cut if the KRG does not hand over the oil. Rather, Baghdad could cut other non-salary related budgets for the KRG.
Oil: Iraq highly unlikely to receive 250,000 bpd from Kurdistan in 2019
Iraq is unlikely to receive the 250,000 bpd it expects from the Kurdistan Regional Government (KRG) in 2019 because previous international oil deals by the KRG and such high exports may put unneeded pressure on the Kurdistan Region’s recovering economy.
The Kurdistan Regional Government cannot hand over 250,000 bpd to Iraq’s state marketing company SOMO as part of the Iraqi budget bill mainly as its oil is subject to legal terms in long-term contracts. Iraq has shown flexibility.
Iraqi Oil Minister Thamer al-Ghadban said on state media al-Iraqiyah on Sunday that the KRG is yet to over 250,000 bpd to SOMO. "It hasn't been handed over up to now", he claimed.
"We expect there soon will be dialogue. We see that the atmosphere is conductive and appropriate," added the minister.
Independent oil exports by the KRG have always been a sticking point in relations between the central and regional governments. Due to this in 2014, the Iraqi government cut the budget share of the region.
KRG has argued that it can sell its oil according to the Iraqi constitution, while Iraq argues oil sales are a strictly federal matter. The vague, inconclusive nature of the issue stems from the document’s writ.
Article 111 of the constitution stipulates that oil and gas are owned by Iraqis “in all the regions and governorates”. Article 112’s first and second sections provide vague detail.
In the first section, the federal government “shall undertake the management of oil and gas extracted from present fields” with the producing governorates and regional governments, and for the revenues to be distributed proportional to population in a “fair manner.”
The second section of the document agreed upon in 2005 stipulates that the federal government, with the producing regional or governorate governments “shall together formulate the necessary strategic policies to develop the oil and gas wealth”. The two articles are vague and both governments have interpreted it differently.
This has led to crippling financial crises, coupled with a drop in oil prices, and the onset of the costly war against ISIS. The KRG had to slash the salaries of its public employees to pay a salary at times once in three months.
However after October 2017 events, Iraq agreed to send about 317 billion Iraqi dinars ($266 million) to supplement the loss of the region’s oil revenues to pay public servants.
In the administration of current Iraqi Prime Minister Adil Abdul-Mahdi relations have improved. Now, the 2019 budget that has become a law and is soon to be implemented.
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