MEOG: Ups and downs in Kurdistan

This week’s MEOG looks at the news that Erbil is set to receive another cash advance while seeking to terminate two gas development licences.

Iraq’s federal government this week transferred more funds to the Kurdistan Regional Government (KRG) to pay the salaries of civil servants, but there has been no word of progress on efforts to reach agreement on budget payments.

Following in the transfer of a IQD200bn ($138mn) advance to Erbil in July, KRG spokesman Jotiar Adil said that the same sum would be sent this week. “Salaries will be paid in full starting the 25th of this month, and the process will finish within a week,” he told Kurdish media outlet Rudaw.

Adil noted that this would be the second month in a row that the KRG had paid its employees in full, with government revenues also needed to ensure that no cuts were required.

Meanwhile, the region’s Ministry of Natural Resources (MNR) has announced that it plans to terminate the production-sharing contracts (PSCs) for Bina Bawi and Miran, which are 100% held by London-listed Genel Energy.

In a press release, Genel said that the KRG “has no grounds for issuing its notices of intention to terminate”.

The company said that it “wishes to continue operations under the PSCs and to work with the KRG on the development of these fields”, noting that it would “take steps to protect its rights under the PSCs and, if necessary, seek compensation, including for its material investment”.

In the first instance, it will issue a notice of dispute for each of the PSCs, “contesting the right of the KRG to issue any such termination notice and, in doing so, trigger an obligation to hold good faith negotiations to resolve this matter promptly and without the need for either party to refer the matter to international arbitration”.