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CCC, have been having a think about the point you raised about quotas.
The deal appears to be for only a portion of the KRG’s production, in return for a smaller % of the national budget than they asked for - both sides seem happy.
Any oil passing through SOMO is by definition Iraqi Oil, it’s a state organisation and its role is to market and export surplus Oil from Iraq.
IF all the KRG Oil went through SOMO it would play havoc with the Iraqi quota and they are already getting their knuckles rapped at present levels.
So how about the following compromise?
We can only give you a budget share if you give us Oil. Much as we would like all of it, we can’t take it, OPEC would go ape.
So you give us what we ask for and you sell the rest off under an exemption...
Won’t someone ask how come some Oil from the KRG is Iraqi Oil and some isn’t?
Nah, it will slip under the radar and if they do, just point them to those two sections of the Constitution that were constructed to generate maximum ambiguity.
CCC, blindingly obvious that as a result of the latest agreement there is no such thing as KRG Oil anymore, therefore it must still exist!
How about the following explanation aimed at two separate audiences.
Within IRAQ all oil now belongs to the Iraqi people as a whole but for international purposes, in order to benefit from exemptions, it is still separate.
" then that implies that not only will IRAQ not be able to increase production, it will have to reduce it.
Will be interesting to see if in reality they will be given any leeway as a result of the internal problems they are facing."
What OPEC wants to achieve is higher stable oil prices, any collective reduction of production Iraq included, will be compensated with higher revenue if the price of oil rises.
In the past the world bank & other institutions have said Iraq's revenue plus international loans are to a certain degree enough for Baghdad to invest and improve conditions for it's people, the demonstrations are because the public are not seeing any basic improvement whatsoever and the wealth is not being efficiently used, hence the corruption that's engulfed the government.
On a separate note, something to consider, the Kurds up to now have been exempt from oil production limits, i would like to know if the Kurds monthly production is going to be in any way effected once they start delivering oil to SUMO, as this will come into to fold of OPEC oil quota amounts.
If the press release from OPEC is correct,
“ OPEC’s de facto leader, Saudi Arabia has been adamant those that have previously been overproducing — such as Iraq and Nigeria — must comply with the group’s quota.”
then that implies that not only will IRAQ not be able to increase production, it will have to reduce it.
Will be interesting to see if in reality they will be given any leeway as a result of the internal problems they are facing.
OPEC see the issue as other members not complying with the quota arrangements. Therefore there are no current plans to change the existing quotas - from which Iraq has a partial exemption..
GKP, KRG, the rest of IRAQ, plus others close by, seem to want to raise revenue through increased production.
Either the market, as it stands in terms of supply and demand, will allow that or it won’t. If it was GKP alone then it wouldn’t be an issue.
On the other hand, if a different player or group object to quotas being breached and also raise production....
So in terms of GKP we could reasonably be facing the following. They finally hit the 55k target just as the increased production leads to a revenue neutral or worse outcome.
It is also reasonable to think that outcome will be revenue positive or if it’s not it is only for a short time.
Some see the present share price as being due to dark forces manipulating it so that “the big boys can scoop up the shares at mates’ rates.” I think it merely reflects the new outbreak of instability/unrest and the uncertainty of what the future holds.
Most of the country is suffering various degrees of Civil unrest , from minor to major , because of the failure of both governments to manage the oil resources effectively. This power struggle for control of Kurdish oil has been going on for the past 10 years. The people have had enough.
The only solution is to come to a negotiated joint agreement , increase production , limit corruption and start spending on infrastructure and basic public services such as water and electicity. If the do that then they might stay in control ( or some of them) if not , the whole current batch of politicians will be replaced. With some of the imprisoned for corruption.
Thats the driver .
IMO
It is difficult to fully understand and interpret the meaning of Kurdish and Iraqi news articles, being so many and broken english.
Reading between the lines of the recent talks and what has been agreed is more than just the headlines of the KRG delivering 250k bpd to Sumo.
Baghdad has asked to complete details of Kurdish debt to all citizens and retirees pensions, all loans and all debt owed by the region to oil companies.
Within the budget talks they both have agreed on a formula on the payment of debt, what this is, is unknown.
My conclusion is GKP's debt including the missing monthly payment as with other oil companies is all part of debt information to be passed on to Baghdad, once or if the budget gets passed, normal payments resume.
I may be barking up the wrong tree, but i believe it is all political games being played for a favorable Erbil, Baghdad budget agreement.