Oil producers in Iraqi Kurdistan will have to close operations if they don’t receive agreed export payments, according to the regional authorities.
“We need to stabilize the payment situation,” Ashti Hawrami, natural resources minister for the Kurdistan Regional Government, or KRG, said Tuesday in London. “We can’t keep saying to oil companies: ‘Give us one more month.’ Eventually this will collapse around us. We need more money.”
Kurdish authorities in December resolved months of feuding with Iraq’s central government over who had rights to export crude from the semi-autonomous region. Nevertheless, payments to producers have remained haphazard as the two sides continue to debate terms, while a slump in oil prices and the exorbitant cost of fighting Islamic State militants have reduced available funds.
Norwegian producer DNO ASA said Tuesday that it can’t sustain investment and production levels if debts to the company aren’t paid. Genel Energy Plc and Gulf Keystone Petroleum Ltd. also operate in the region.
The federal government currently takes all the revenue from the 550,000 barrels a day exported under the December agreement and returns a portion to the KRG. Its payments don’t even cover the cost of the civil service, including the Kurdish forces protecting the oil fields from militants, Hawrami said.
“If Baghdad is unable to pay, fine, let us find a better way to coordinate,” he said at a conference. “We are not going to fall out, but the oil companies have a limited capacity to produce for free.”
Misinterpreted Situation
The central authorities contend that the two sides calculate the share of funds due to the KRG differently.
“The financial situation is a misinterpretation,” Falah Alamri, director-general of Iraq’s state-run Oil Marketing Co., said at the conference. “The KRG needs to sit with the government to resolve this issue.”
Iraqi Kurdistan, which exports its 550,000 barrels a day through Turkey, has expanded the capacity of its pipeline to as much as 700,000 barrels a day, Hawrami said. It’s also adding a new pumping station, meaning that within eight months the capacity will top 1 million barrels a day, he said.
“Both sides must keep up discussions to solve problems,” Iraq’s Deputy Prime Minister Rowsch Shaways said. “It will be much better when the KRG is delivering more oil and the Iraqi government pays the whole share. Until they do that there will be problems with both sides.”
Plantagenet on Tue, 9th Jun 2015 6:05 pm
The Kurds would be better off if they signed independent contracts with the oil companies or even declared independence fro the corrupt Shia government in Baghdad. Unfortunately, the Obama administration is dictating that everything ….money, weapons, equipment, etc….must go through the corrupt central Shia-dominated government in Baghdad, leaving the Kurds no choice but to beg for their fair share of the oil payments.
Davy on Tue, 9th Jun 2015 6:54 pm
I like the Kurds. The are survivors. They are the underdogs. Their women are hot too. That’s always a plus.
MSN Fanboy on Tue, 9th Jun 2015 6:55 pm
Food for thought: “We need more money.”
Maybe shorts theory is proving true.
BobInget on Tue, 9th Jun 2015 10:02 pm
President Obama sends an additional 1,500 ‘
‘advisors’ back into Iraq.
If you will excuse me for being irreverent, but I’ve seen this movie twice before.
Make that three times. I was still in high school
when my friend, Wesley Irons, enlisted in the navy headed to Korea.
What truly irks a person should be never admitting why we are sending Americans to Iraq. Is it just to keep ‘our oil’ from falling into the wrong hands? ISIS in this case.
Remember when “W” was being told Iraq would be over in a few months and cost under two billion dollars. Fourteen years later and three trillion dollars, with no Congressional debate,
we doubled down.
Next thing ya know we will be sending troops into Libya… as advisors.
Don’t believe what you are reading?
IMO: ISIS is after the entire shooting match;
Syria, Iraq, Libya, Nigeria, Yemen, Saudi Arabia.
Doubtless, 4,000 American troops can spoil IS
plans.
Israel and Saudi Arabia are planning to bomb Iran. When that happens, how many more Americans do we send?
Notice how news out of Yemen has dropped from sight? This piece squeaked by:
http://www.theguardian.com/world/2015/jun/08/yemen-drone-strike-lawsuit-obama-western-war-on-terror
I love irony, as you know. Here’s hoping Yemenis hire a Jewish Law Firm.
BobInget on Tue, 9th Jun 2015 10:28 pm
Fanboy, Short is thinking inside the box. Under ideal conditions he may have been proven sane.
As it stands, War is the one great overriding influence that cannot be ignored. (God knows, we are trying)
Because of Saudi Arabian price war with Iran, a tippy Venezuelan government almost collapsed, and might still, if it were not for Chinese and Russian aid. In exchange, Russia and China intend to deprive the US of Venezuelan crude.
The upshot remains. Canada’s oil goes to Eastern Canada.
Mexico sends up oil for US to refine. WE send
back jet fuel, diesel and gasoline.
Losing Saudi Arabian and Iraqi and Libyan is nothing compared to losing most Canadian and Venezuelan crude.
That’s why shortonoil’s calculations have been trumped by bad judgement, superstition, greed
and lack of historical perspective.
Since oil is so connected to growing wheat, corn and rice, get set for much higher food pricing worldwide. If there is anything more disruptive then wars it’s hunger.
If you need proof look at millions of refugees fleeing these endless oil wars, this very year.
GregT on Tue, 9th Jun 2015 10:33 pm
“Short is thinking inside the box.”
Why do you think so Bob?
BobInget on Tue, 9th Jun 2015 10:34 pm
NYT’s who broke the story has 400 troops joining 3,000 already in country. 400 number is at least two thirds underdone.
http://www.nytimes.com/2015/06/10/world/middleeast/us-adding-military-advisers-to-reclaim-iraqi-city-officials-say.html?action=Click&contentCollection=BreakingNews&contentID=35648382&pgtype=Homepage&_r=0
BobInget on Tue, 9th Jun 2015 10:45 pm
GregT
You are joking right?
That entire post explains why?
Oil, because it is so vital to any economy, left or right, it makes no difference, is the most complicated, nuanced, falsified, traded, conflicted commodity worldwide.
Just read accounts of any of the half dozen oil wars going full tilt this day. You will almost never see reference to motive. China is busy building an island in the South China Sea. Don’t ask why if you can’t stand some bullshit about shipping safety.
apneaman on Tue, 9th Jun 2015 10:46 pm
Alfred W. McCoy: The Geopolitics of American Global Decline
https://www.guernicamag.com/daily/alfred-w-mccoy-the-geopolitics-of-american-global-decline/
GregT on Tue, 9th Jun 2015 10:50 pm
No Bob I am not joking.
What does ISIS have to do with Short’s models? I am asking you a genuine question.
Northwest Resident on Tue, 9th Jun 2015 11:31 pm
BobInget — I’m no scientist, but it is just plain common sense and obvious by observation that oil is getting far more expensive and energy intensive to extract while at the same the oil extracted provides less and less energy over time due to declining quality. And as the quality of the remaining energy declines, so does its value to the economy.
That’s all just plain common sense.
It doesn’t matter to what extent the oil business is complicated, nuanced, falsified, etc… The central physical facts remain the same. Don’t they?
GregT on Tue, 9th Jun 2015 11:37 pm
Thanks Apnea,
I call this ‘The New Great game’.
This part is of particular importance:
“in October 2014 Beijing announced the establishment of the Asian Infrastructure Investment Bank. China’s leadership sees this institution as a future regional and, in the end, Eurasian alternative to the US-dominated World Bank. So far, despite pressure from Washington not to join, fourteen key countries, including close US allies like Germany, Great Britain, Australia, and South Korea, have signed on.”
The globalists have gained control through their central banks. The USD is their currency. Those who are really in control of the US government, and the US MIC.
apneaman on Tue, 9th Jun 2015 11:53 pm
China to Have Veto at Infrastructure Bank
http://blogs.wsj.com/chinarealtime/2015/06/09/china-to-have-veto-at-infrastructure-bank/
Davy on Wed, 10th Jun 2015 5:42 am
Greg, how is China’s version of the IMF going to be any better for the world in regards to your passionate opposition to central banking and global financial organizations? It is just the Chinese attempt at being globalist or maybe part of the globalist plan. The same feathers different color.
Davy on Wed, 10th Jun 2015 6:18 am
Bob said “Short is thinking inside the box. Under ideal conditions he may have been proven sane.”
Who is thinking inside the box Bob? We are talking peak oil dynamics. We are talking all those influences above ground and bellow. Your geopolitical focus has great merit Bob but we are not there yet and there is no indication if Mideast warfare will turn out to be the dominant peak oil dynamic that destroys supply.
Short is on target with his ETP formula and projections. I feel personally his price projects can be influenced short term by political and economic events but within those volatile events is ETP. IOW we could see a spike or drops for all those reasons we have seen traditionally but the diminishment of oils economic value through depletion is part of the laws of nature and foundational.
Bob, you problem is you are so focused on war you can’t see the forest and you can’t see there are many species of trees in that forest. You are in the deciduous part of the forest so to speak with the coniferous part starting just over the hill. We have had low level conflict in the area of the Mideast for most of oil’s modern history. The area is prone to conflict for a variety of reasons. I don’t think it will be Isreal/Iran, ISIS, or KSA/Iran conflict that will destroy the oil markets.
The economy crashing within negative systematic circumstance within oil’s steadily declining economic value is my bet. In my mind it is all of the above so to speak making oil’s influence on the economy going negative. You then add in multiple other predicaments that are negative. If oil’s value to the economy was on a steady increase we would have more time to battle the other predicaments and problems instead oil ETP is just another predicaments giving us negative converging feedbacks.
Mideast conflict adds to the ETP price influence on oil in my mind. Oil’s economic value is declining with increasing cost from conflict in the ME that is clear. The ME conflict disruptions are raising production costs no doubts there that is called a conflict premium. The ME problems could raise prices in the short term but longer term it is making oil value to the economy go down. Sustained and long term oil prices from a serious oil disruption in the ME is not likely because a serious price spike will surely kill the global economy crashing prices. It is BAUtopians like you BOB that can’t see this. You think BAU can deal with high oil prices.
Your conflict scenario could play out but I think there is a basic balance of power in the region keeping ambitions in check. I am not as awestruck as many and you with ISIS. They will control Sunni areas in Iraq and Syria but that is likely the extent of it. They do not have the level of support needed to overrun a region with hostile populations and no international support. All they have is small scale covert support.
In summary Bob, can I recommend this book: http://www.biblio.com/book/seeing-forest-trees-william-lansing/d/280671223?aid=frg&utm_source=google&utm_medium=product&utm_campaign=feed-details&gclid=CKvg-638hMYCFQiOaQodYWkAJQ
GregT on Wed, 10th Jun 2015 7:10 am
“Greg, how is China’s version of the IMF going to be any better for the world ”
It probably isn’t Davy. Human nature being what it is. However, as it stands at the moment, the Chinese are playing a financial game of ‘Chess’ while the oligarchs running DC are playing ‘Risk’.
Steve O on Wed, 10th Jun 2015 11:24 am
Bob, It’s not often I agree with you, but when I heard “we’re sending advisers” I though I was in a time warp back to the Kennedy administration.
I assume the military solution is going to be as successful as it was in Vietnam.
BobInget on Wed, 10th Jun 2015 12:46 pm
One sad fact. Few people understand or accept or care about shortonoil’s theory or my war obsession.
Because energy is central to human existence I get carried away by emotion.
Shortonoil is pressing home one important factor, affordability.
On a global scale there are millions, living on $2.00 a day who spend 70% on food. Obviously, that ‘living standard’
cannot go on without serious geopolitical repercussions. Maybe, we could agree,
hungry, undereducated, unemployed people
are easy pray for radicals of every stripe.
It’s a great irony but imported oil we depend on, with two exceptions, (Norway, Canada) ,
is located in regions of the world where income disparity is greatest. We in the West are already subsidizing our ‘living standards’
at the expense of the guy trying to feed a family on two bucks a day.
Saudi Arabian Princes, western educated,
are keenly aware of how volatile a situation can become when food becomes too expensive and hard to find.
For decades, Royals have been buying rich farmland through dummy corporations
and openly. The issue becomes tense when a selected nation’s food supplies are exported and that target nation is forced to import lower grade food to feed restless
peoples. Agree?
WE will go on drilling, digging, mining, deforesting, stealing from each other, rather then die of starvation or cold. If Millions already spend all their time or income on food, in a Nine Billon Person World, what stops this trend?
In the next forty years, we need to grow more food then has ever been grown since AG began. How can we do that w/o stealing (oil) from peoples far poorer?
If funds are allocated as they are today to support, with hundreds of tax write-offs,
fossil fuel companies, military adventurism,
we simply put off sustainable conversions.
ISIS did not come out of a Mulla’s wet dream.
It seems to come as a surprise to most that
economically repressed peoples will at some point express harsh violence.
Public be-heading is nothing less then an expression of frustration and hatred.
Ask French aristocrats. French revolutionaries
made IS look like Goodie Two Shoes.