Oil Producers in Kurdistan Want Payment Soon

Three of Iraqi Kurdistan's main oil producers said they expect payments this month from the regional government for oil exports, as they look set to finally reap the rewards from years of investment in the area.

Genel, DNO and Gulf Keystone Petroleum (GFKSY) are owed money by the Kurdistan Regional Government for crude exports mainly from their Shaikan, Taq Taq and Tawke oil fields, which have brought in around $3 billion in revenue for the autonomous region since exports started in January.

The KRG promised to pay producers $75 million last week. What would be the first major payment would highlight the regional government's success in increasing exports despite opposition from Baghdad.

Regular payments would also bolster the case for further investment in Kurdistan. Genel on Thursday signed a deal to develop two major gas fields.

"If we can see some stability in cash generation that would be a major factor for de-risking these projects," said Jamal Orazbayeva, analyst at Westhouse Securities.

In results releases on Thursday the three firms welcomed the KRG's pledge to start making steady payments.

"We recognise the pressure (the KRG) are under, but they also recognise that the oil companies need money to invest and that the reinvestments increase the size of the pie for everyone," DNO Chairman Bijan Mossavar-Rahmani told Reuters.

Gulf Keystone chief executive John Gerstenlauer said a schedule for payments from the KRG was crucial for his company to determine how much and when it can invest next year.

Kurdistan's oil exports have been a thorn in the side of Iraq's central government and the two sides have been negotiating a solution to sharing the country's oil resources. Baghdad says all oil sales not handled by the central government are illegal, and has not given the region its share of the federal budget since the start of the year

The Kurdistan Regional Government says the sales are allowed under the Iraqi constitution.

But despite the standoff, exports from the region are running at almost 300,000 barrels per day, and the natural resources minister has said he expects them to rise to 500,000 bpd early next year.

Oil production from the three firms' oil fields was largely unaffected by staff evacuations over the summer as Islamic State fighters neared oil facilities in Iraqi Kurdistan.

But DNO said plans to expand its Tawke oil field had been delayed and Genel said it had pushed back an increase in capacity at the Taq Taq field to the third quarter of 2015.

Gulf Keystone, on the other hand, maintained its year-end target to increase production at its Shaikan oil field to 40,000 gross barrels per day.

Reporting by Karolin Schaps