Member Info for theoryman

@invstrat, the KRG have not broken any clauses in the PSC,, they have failed to make payments under a separate Sales Agreement.

When it came to the company’s payments to the KRG they paid those required under the PSC but not those under separate contracts.

Three viewpoints wrt the PSCs:-

#1 The contracts were illegal when signed

#2 The contracts were legal when signed and they are solely with the KRG.

#3 The contracts were legal when signed and through the Sovereignty argument, even though they look like they are with the KRG, they are effectively with the FGI.

So if you were offered 80% of the debt, to be repaid over time as cost recovery through a new commercially equivalent contract with the FGI, would you accept the offer under each of the three scenarios?

#1 YES!!!!

#2 Yes, move on, the future looks good.

#3 Hmmm, probably Yes. Proving you are right sometimes just isn’t worth it.

APIKUR as an entity throws up a few issues IMO - group identity versus individual needs has been covered previously.

Who sanctioned Caggins’ reference to strangling and hands around the neck?

What was the intention? To deliberately mess up negotiations? To provoke the FGI into doing something self destructive? To expose the limitations of what the FGI can do?

Best of luck to anyone having to convince the FGI that the PSCs are a fair return when taking on board the fact that the IOCs and not the KRG took on the risk of failure. All of the other sides representatives are used to TSCs where the Government take on the initial financial risk.

Combine that with survivorship bias in the data set, only those IOCs who found commercial oil are getting rewarded through the PSCs, so their returns will seem way too generous when looked at in isolation.

Might be better to start with looking at the failures, the PSCs and TSCs that didn’t get going 🙄

From the KRG MNR website published yesterday.

https://gov.krd/mnr-en/activities/news-and-press-releases/2024/april/statement-by-the-ministry-of-natural-resources-of-krg/

Here’s a translation from a link that @gavsgear posted previously.

“According to Al-Lajmawi, the visit will also witness "the signing of a strategic framework agreement within the security, economic, and development fields, and progress in the water and energy files, and the process of resuming the export of Iraqi oil through Turkey”

Three clauses there, will be interesting to see what he signs, which bits get progressed but remain unsigned and which bits are still being processed by the time he leaves.

I know that verbal contracts are not worth the paper they are written on but didn’t realise it also applies to written ones with the KRG.

Apart of course if you are DANA and have leverage through very high API oil and condensate, for some reason Shaikan crude doesn’t have the same bargains power.

I wonder are what stage the BOD realised that was the case?

Before signing?!

After X months, where X has a value of ?

So unenforceable contracts with the KRG versus some within the FGI making it very clear that APIKUR is seen as meddling in Iraqi politics and are very keen to show the IOCs the route to the exit door.

@ValueS, it’s not a theoretical point.

GKP gave up its right to sell the share of the oil produced, and therefore owned through the PSC, via the sequence of Sales Agreements it signed - it NEVER gave up ownership.

Were they agreements but not contracts and therefore unenforceable?

Were they contracts and if so why did the company never take legal action to enforce them?

I believe the last Sales Agreement with the KRG has expired and I also believe there isn’t one with the FGI.

At the moment the PSC is working from the company’s point of view as was originally designed - they are taking their share and selling it at price they find acceptable in the circumstances.

Apologies, didn’t have my cynical mode on when I read his quote.

He hasn’t seen the contracts 🙄 so he doesn’t know how PSCs work and therefore about the transfer of ownership on the surface.

So how did the FSC rule them illegal if they weren’t available in Iraq?

They used to be findable by searching for Kurdistan MNR Production Sharing Contracts, people on the old iii site had copies.

We have sent a letter to the KRG asking them to hand over the oil produced in these [The Kurdistan Region’s] oil fields to the oil marketing firm, SOMO,” Iraq Oil Minister Hayyan Abdul Ghani told Rudaw’s Diyar Kurda in Washington.”

Maybe a slight problem there, in the case of the Shaikan PSC circa 47% of the production becomes the property of the IOCs at the stipulated point of delivery on the surface.

The IOCs could agree to their share also being transferred to SOMO but if they don’t then it is not the KRG’s to hand over.

Why would they agree? If the new arrangements meet their financial needs then off we go. As straycat has pointed out, each of APIKUR’s members has specific financial needs.

What would happen if they don’t agree? As we are now, litigation, add your own vision…

Https://shafaq.com/en/Iraq/President-Barzani-to-attend-an-extraordinary-meeting-of-State-Administration-Alliance#:~:text=According%20to%20the%20source%2C%20the,%2DSudani%2C%20and%20other%20leaders.

“The source explained that the agenda of the meeting will focus on political agreements and finding solutions to the outstanding issues between Baghdad and Kurdistan.”

At the bottom of the article it lists the main protagonists within the coalition.

Which ones would be happy if the outstanding issues never get resolved?

Which ones are unhappy about his proposed upcoming visit to the USA?

Do they have sufficient fire power to call for Sudani’s resignation?

Will they simply let him have his say then try to block progress at ministerial level?

Their problem is his popularity within the population as a whole, if the surveys can be believed, is very high and cuts across political boundaries.

Last Friday in Ramadan, I think it will be a really BIG announcement, something along the lines of…

We met in an atmosphere of mutual respect and now have a greater understanding of each other’s position.

We have agreed to set up technical and political committees to search for a solution through a mutually agreed interpretation of the Constitution.

“ 400k bopd exports from #Kurdistan included in 2024 budget. Baghdad needs those exports to pay for salaries.”

See my post earlier today, they have replaced the 400k bopd from Kurdistan with 300k bopd of their own.

Whilst it’s 100k bopd less than the budget requires, they are getting a far higher price per barrel than the $70 per barrel needed to balance the budget. Judging by the price they got in December they are pulling in the same as Brent FOB.

They do not need the Kurdish oil to pay the salaries, they are currently running a surplus budget without it.

There has been a lot of focus on this “lost” revenue e.g. in APIKUR press releases but how is the Iraqi budget doing under present conditions?

Towards the end of their last financial year, they were running a monthly surplus, which significantly reduced the deficit built up in the early months when the pipeline was closed.

They have even allocated an INCREASED amount for the current budget and they are running a SURPLUS at the moment, compared to what’s required to fund that boosted figure.

What have they done to bring this turnaround about?

The budget sets out 3.1 million bopd from Iraq and 0.4 million bopd from Kurdistan, to give a total of 3.5 million bopd being exported at $70 a barrel.

They have sneakily INCREASED their own exported production to 3.4 million bopd to take advantage of the increase in the PoO in general. The price rise more than compensates for the drop in volume.

They are doing very nicely thank you, and there are no signs that is going to change, unless there are consequences when someone points out they have also promised to REDUCE production to meet OPEC+ quotas 🙄

In Iraq I believe the Ministries were allocated to factions that made up Sudani’s coalition. I now think that is not just at ministerial level or the top echelons, it’s the whole entity.

So the by-product is that the two governments agree political and technical solutions at Prime Ministerial level, Sudani and his advisors on behalf of Iraq, BUT once it gets to the implementation stage at Iraqi ministerial level, they blatantly refuse to carry out his wishes.

The conduct of both the Oil and Finance Ministries reflect just how confident they are that their power cannot easily be taken away. They miss every deadline they are set, at least one minister makes up the content of their press interviews and has been called out for doing so, without any come back.

Once allocated those ministries, I believe their power cannot be taken away unless there is a complete restructuring of the coalition.

Can Sudani risk attempting to get those very important areas under more favourable control?

Lots of references on here to pressure building, will there be a safe release combined with a positive outcome or a very destructive explosive outcome?

As far as the FSC ruling is concerned, production contracts are OK, as are revenue sharing or profit sharing ones. The ones that fall foul of it are the combination of production AND sharing that production.

They ruled that the oil belongs to ALL of the people of Iraq, you cannot share what you do not own, so the KRG have no right to share the physical oil with the IOCs.

At the moment all that can be deduced is that the PSCs are the bone of contention and not the existence of IOCs working in Kurdistan - they are two separate issues are should not be blended in any argument.

From memory none of the Gas contracts involved any form of production sharing, they were not PSCs like the oil ones, so IMO there is no evidential carryover.

Maybe make it weekend specific?

IWNWTBOOTOTBHW

Did Bloomberg ask any other questions?

Minister, with reference to the conditions set out by APIKUR that need to be in place before exports can restart.

Minister, will the proposed amendment to the budget meet the requirements of APIKUR regarding the commercial equivalence of the reviewed and amended contracts?

Minister, have APIKUR approved the mechanism for repaying the outstanding debts, who will act as guarantor?

Minister, have you discussed any of this with APIKUR since the meeting in January?

@JLB58, I reached exactly the same conclusion using the same information in the same way. There are those who would suggest it might be an idea for you to seek help 🙄.

I pictured the accounts payable as being composed of two distinct groups, unavoidable historic ones and those arising from recent production.

The excess monthly cash has been used to pay off the historic ones rather than being banked.

What’s left now in accounts payable will either be almost completely or completely down to current production.

If correct then the company will be in a self funding profit generating state.

@itsaponzi, the company will have adapted production to match the demand at the price they are prepared to sell at, I.e. one where they still make a profit after costs.

Who owns the oil in the ground? All the people of Iraq.

Who has the right to bring it to the surface? GKP

Who has the right to take a share of production and sell it at whatever price they want? GKP

Hmmmm! So a valuable resource is being sold off profitably, but very cheaply, by someone who doesn’t originally own it and the original owners can’t prevent it?

Long live PSCs!