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Economic: Re-exporting Kurdistan oil will cause Iraq to lose $5 billion and a budget deficit
Economy 11-16-2024, 13:09 |
Baghdad today - Baghdad
Economist Nabil Al-Marsoumi confirmed today, Saturday (November 16, 2024), that re-exporting Kurdistan’s oil will cause Iraq to lose $5 billion, while noting that
it will cause a budget deficit.
Al-Marsoumi said in a post on Facebook, followed by Baghdad Today, that the
Kurdistan Petroleum Industry Association (APIKUR) welcomed the proposal to amend Article 12 of the Budget Law,
but believes that there is sufficient scope in the current wording to cover its previous requests related to commercial conditions and guaranteeing payment. Payments for past and future exports through the Iraqi-Turkish oil pipeline.” He added,
"The amendment stipulates that the Federal Ministry of Finance shall compensate the Government of Kurdistan from sovereign expenditures for the costs of production and transportation, for the quantities of oil produced in the region that are received by (SOMO), or the Federal Ministry of Oil, provided that the fair estimated costs of production and transportation are calculated for each." Field by field, by a specialized international technical advisory body, determined by the Federal Ministry of Oil in agreement with the Ministry of Natural Resources in the region,” indicating that
“production and transportation costs are compensated by the Federal Ministry of Finance.” As an advance, at a rate of $16 per barrel, it will be settled later after the completion of the specialized technical consultant mentioned above, and retroactively from the date of commencement of delivery.” Al-Marsoumi continued,
“According to the results of Deloitte’s audit for previous years, the region was only receiving 44% of oil revenues, and
the rest is received by foreign oil companies to cover the costs of production, transportation, marketing, and the profits of foreign companies, which are specified in most contracts at 20% of oil profits after deducting costs.” amounting to 40% of the price of a barrel of oil to recover part of the costs incurred by foreign companies when investing in the oil sector in Kurdistan. He explained,
"In light of these facts and because of Iraq's commitment to OPEC Plus restrictions, the amount of Kurdistan's exports amounting to 400 thousand barrels per day will require reducing the same amount from the central and southern fields, which will lead to a decline in oil revenues by about 5 billion dollars annually,
which means an increase in the budget deficit by the same amount due to... Differences in costs and profits of foreign companies and the lower quality of Kurdistan’s oil.” He stated,
"The solution lies in Iraq's request to OPEC Plus to exempt it from the mandatory and voluntary cuts imposed on the production quota so that there is an economic feasibility in re-exporting oil from Kurdistan."
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Economy 11-16-2024, 13:09 |
Baghdad today - Baghdad
Economist Nabil Al-Marsoumi confirmed today, Saturday (November 16, 2024), that re-exporting Kurdistan’s oil will cause Iraq to lose $5 billion, while noting that
it will cause a budget deficit.
Al-Marsoumi said in a post on Facebook, followed by Baghdad Today, that the
Kurdistan Petroleum Industry Association (APIKUR) welcomed the proposal to amend Article 12 of the Budget Law,
but believes that there is sufficient scope in the current wording to cover its previous requests related to commercial conditions and guaranteeing payment. Payments for past and future exports through the Iraqi-Turkish oil pipeline.” He added,
"The amendment stipulates that the Federal Ministry of Finance shall compensate the Government of Kurdistan from sovereign expenditures for the costs of production and transportation, for the quantities of oil produced in the region that are received by (SOMO), or the Federal Ministry of Oil, provided that the fair estimated costs of production and transportation are calculated for each." Field by field, by a specialized international technical advisory body, determined by the Federal Ministry of Oil in agreement with the Ministry of Natural Resources in the region,” indicating that
“production and transportation costs are compensated by the Federal Ministry of Finance.” As an advance, at a rate of $16 per barrel, it will be settled later after the completion of the specialized technical consultant mentioned above, and retroactively from the date of commencement of delivery.” Al-Marsoumi continued,
“According to the results of Deloitte’s audit for previous years, the region was only receiving 44% of oil revenues, and
the rest is received by foreign oil companies to cover the costs of production, transportation, marketing, and the profits of foreign companies, which are specified in most contracts at 20% of oil profits after deducting costs.” amounting to 40% of the price of a barrel of oil to recover part of the costs incurred by foreign companies when investing in the oil sector in Kurdistan. He explained,
"In light of these facts and because of Iraq's commitment to OPEC Plus restrictions, the amount of Kurdistan's exports amounting to 400 thousand barrels per day will require reducing the same amount from the central and southern fields, which will lead to a decline in oil revenues by about 5 billion dollars annually,
which means an increase in the budget deficit by the same amount due to... Differences in costs and profits of foreign companies and the lower quality of Kurdistan’s oil.” He stated,
"The solution lies in Iraq's request to OPEC Plus to exempt it from the mandatory and voluntary cuts imposed on the production quota so that there is an economic feasibility in re-exporting oil from Kurdistan."
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