Genel could halt Kurdish oil exports over pay delay

LONDON Fri Oct 5, 2012 7:56am EDT

Related Topics

LONDON Oct 5 (Reuters) - Iraqi Kurdistan's leading oil producer, Genel Energy, said on Friday it may halt exports after receiving no payment three days after Baghdad insisted a transfer of funds to the semi-autonomous region had begun.

Baghdad and the Kurdistan Regional Government (KRG) agreed last month to settle a dispute over oil payments after the northern region promised to continue exports and the central government said it would pay foreign companies working there.

"If we don't get paid, we will tell the KRG that we definitely want to cut (off) the exports," Genel Energy President Mehmet Sepil told Reuters. "We have not received any money."

Exports from Kurdistan have risen to 170,000 barrels per day (bpd) and the fields of Taq Taq and Tawke, where Genel Energy is involved, are contributing about 110,000 bpd.

In April, Kurdistan halted shipments of its oil in protest over what it said were overdue payments from the central government to companies in the Kurdish region.

It later resumed exports through a Baghdad-controlled pipeline from Kirkuk to the Turkish port of Ceyhan, but threatened to cut them off again if there was no agreement on payment.

Iraqi Deputy Prime Minister Rosh Nuri al-Shawish told Reuters on Tuesday that the Finance Ministry had issued an initial $650 million payment to the KRG.

London-listed oil explorer Genel, the first to arrive in Kurdistan, has complained it has not been paid for most of the oil exported in 2009 and 2011. Other operators, including Norway's DNO, have voiced similar grievances.

Taq Taq and Tawke form the backbone of KRG exports and Sepil said deliveries from Taq Taq alone could be ramped up to around 95,000 bpd.

Deliveries from Tawke could climb to 90,000 bpd, industry sources said. Khurmala, the northernmost part of the giant Kirkuk oilfield, makes up the remainder of exports.

Kurdistan has angered Baghdad by signing deals with foreign oil majors, such as Exxon and Chevron, contracts the central government rejects as illegal.

The oil contracts row is part of a broader battle between the Baghdad government and Kurdistan over oil rights, territory and regional autonomy that is straining Iraq's uneasy federal union.

FILED UNDER: