OSLO: Kurdistan’s Minister of Natural Resources has reduced the payment threshold of the withheld amounts to 20 percent from 50 percent earlier of incremental revenue above USD 50 per barrel.

Kurdistan’s Minister of Natural Resources has informed the international oil companies operating in the region of an intention to extend the payment period for arrears built up from non-payment of certain invoices in 2019 and 2020.

As widely reported, last December the Prime Minister of Kurdistan announced a decision to pay the companies 50 percent of incremental revenue in any month in which Brent prices exceed USD 50 per barrel towards the arrears.

The revised terms reduce the payment of the withheld amounts to 20 percent of incremental revenue above USD 50 per barrel.

The Minister also advised that all international oil company invoices, including towards withheld amounts, will now be settled within 60 days of receipt.

Kurdistan Regional Government (KRG) proposed an amendment, starting with the March 2021 production invoice, to payment terms due to the ongoing challenges in Iraq with the COVID-19 pandemic.

The KRG has noted that since the dated Brent price has remained consistently well above $50 per barrel, the monthly repayment of outstanding arrears will now be calculated as 20% (compared to 50% previously) of the difference between the average monthly dated Brent price and $50 per barrel multiplied by the gross Shaikan crude oil volumes sold in a month. The balance for the November 2019 to February 2020 outstanding invoices currently stands at $65 million.

The KRG has stated that payment will now be 60 days after submission of each invoice. The KRG has also stated that should international oil markets see substantial volatility, it commits to re-evaluating this payment model.