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The Kurdistan Regional Government (KRG) is temporarily halting exports of heavy crude from the Shaikan field via the Kirkuk-Ceyhan export pipeline, the operator of the Shaikan field, Gulf Keystone Petroleum, said on Thursday.
KRG’s Ministry of Natural Resources will begin exporting all the crude production of Shaikan via trucks to Turkey toward the end of February, Gulf Keystone said, adding that thus, no Shaikan crude will be injected into the Kirkuk-Ceyhan export pipeline at Fishkhabour, until further notice by the ministry.
The authorities have told Gulf Keystone that the new export arrangement is required for the “overall crude oil export quality management and is expected to be temporary”.
The company clarified, however, that the new export arrangement is not expected to affect the production levels at Shaikan, which is operated by Gulf Keystone owning 75 percent of the working interest.
The Kurdish ministry has assured Gulf Keystone that it would pay for the additional transportation costs under the new export arrangement and that the company would continue to receive a fixed payment of gross US$15 million monthly for sales of crude oil.
Gulf Keystone is also negotiating with Kurdistan to secure a timely and regular payment, the company said.
“Subject to further clarity on these points, the Company looks forward to making further investments to maintain at least plateau production at nameplate capacity of 40,000 bopd, with a view to increasing to 55,000 bopd as soon as possible,” Gulf Keystone said.
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KRG, however, has been struggling to pay regularly to companies as it has been locked in arguments with the central government in Baghdad over payments for oil exports, and allegedly over oil shipments made without approval from Baghdad. Political parties in Kurdistan are also quarreling over the share each of them gets from the oil trade. Further putting pressure on the finances of the region – which is home to large oil fields – have been low oil prices and the costs of combating the Islamic State in northern Iraq.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.