- Lack of payments from KRG slows down developments in Iraqi Kurdistan
- Canadas WesternZagros has invested $500m on two oil blocks
The lack of payments from the Kurdistan Regional Government (KRG) has led to a slowdown in oil field developments in Iraqi Kurdistan, according to the CEO of WesternZagros.
The Canadian exploration and production company has invested $500m on two oil blocks in the south of the region and is aiming to reach an eventually production capacity of 125,000-150,000 barrels a day (b/d).
The shortage of funding [to international oil companies] from the KRG has contributed to the delay in approval of development plans, said WesternZagros CEO Simon Hatfield, speaking at the Iraq Petroleum conference in London on 10 June.
Along with many other investors in the region we admit to being frustrated with the pace of development plan approval. We have noticed slowdowns in activity across the board, he added.
Several factors have contributed to a budget crisis for the Erbil government. The KRG has been funding the regions defence against Islamic State in Iraq and Syria (Isis) and accommodated large numbers of refugees while dealing with lower oil prices and according to the KRG unfair federal budget payments from Baghdad.
Hatfield highlighted these factors and expressed the companys continued support for the KRGs development plans, but called for changes to restore confidence to international oil companies (IOCs) operating in Iraqi Kurdistan.
Steps need to be taken to restore IOCs confidence in the path forward. We believe this should include a consistent energy policy on sustainable payments for oil exports, said Hatfield.
We are one of the few companies with an active rig working the region, he added, highlighting the lack of exploration in the current investment climate.
WesternZagros, which is currently producing over 6,000 b/d, sells into oil into the domestic market. Hatfield said it is being utilised in topping plants in Iraqi Kurdistan due to its high diesel cut.
The company has two exploration and production blocks Garmian and Kurdamir both located in Sulaimaniyah province.