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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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Established in 2006 as a Community of Reality

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    Before Baghdad ... the oil policy in the Kurdistan region is the reason for our financial ruin

    Rocky
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    Before Baghdad ... the oil policy in the Kurdistan region is the reason for our financial ruin Empty Before Baghdad ... the oil policy in the Kurdistan region is the reason for our financial ruin

    Post by Rocky Sun 10 May 2020, 6:24 am


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    [size=18]Alan M. My light

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    [size=30]Before Baghdad ... the oil policy in the Kurdistan region is the reason for our financial ruin[/size]
    [ltr]2020.04.29 - 22:19[/ltr]
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    Alan M. Nuri  
    Al-Sharqiya TV interview with the Iraqi Minister of Oil, Thamer Al-Ghadban, which was broadcast on April 25, was for the observer from the Kurdistan region to spray salt on a wound that did not heal. It comes with the start of a new round of escalation between the region’s authorities and the Iraqi caretaker government, centered on stopping the sending of government employees ’salary dues in the region due to the latter’s accusation of not fulfilling its obligations to deliver 250,000 barrels of oil per day to the Iraqi Oil Marketing Company (SOMO).   
      

      
    [size=20][size=20]The citizens of the region had breathed a sigh of relief after the agreement between the Prime Minister, Adel Abdul Mahdi, and the territorial government to separate employee salary salaries from the chronic disputes over the region's oil policy. The provincial government has "saved it" for employees for years, and we have come to see regular payments of salaries every month, which is the last thing the district administration has failed to commit to for years ...      
      
    But all this evaporated again since the beginning of the current month of March, so the last salary received by the miserable employee in the region is the salary of December of 2019, more than fifty days before writing this article. That is, with the start of the campaign of social exclusion, the curfew in the region, and the request of citizens to adhere to their homes to deal with the outbreak of the Corona epidemic. Which made it a complex crime against citizens at a time when they are most in need of a subsidy and a push back in order to make the social exclusion campaign a success. Suffice it to know the impact of this crime, a reminder of the panic that afflicted state employees in the center and south, when rumors spread about the possibility of the caretaker government adopting the policy of "compulsory saving" as in the region.  
      
    Come back to the Iraqi Oil Minister  
      
    Although the interview carried several titles with it, what stops me is the information that is useful in drawing a comparison picture of the gravity of the results of the "independent" oil policy adopted by the regional government. The Iraqi Minister of Oil stated that the profit rate of the oil companies contracting with the Iraqi government, according to the service contracts for the years 2010 -2018 was $ 1.41 per barrel produced, and the rate of these companies ’dues (expenses + expenses) equal to 14.3% of the total revenues from selling Iraqi oil, with Note that these figures do not include contracts and transactions for the production and sale of oil in the Kurdistan region.  
      
    What about the Kurdistan region?  
      
    Since 2007, the Kurdistan Regional Government has chosen formally, and much earlier, unofficially, to take an “oil of its own” policy independent of Baghdad. This was done against the backdrop of deliberate neglect to develop the potential for oil and gas production in the region (other than Kirkuk) by successive Iraqi governments with chauvinistic motivations that are not hidden from the Kurdish citizen. Under the pretext of correcting historical injustice, the regional government signed contracts with foreign oil companies, without Baghdad's approval. And it started to export oil independently.  
      
    This position, along with the fragility of its legal justifications in the Iraqi constitution and in international law, has weakened the negotiating position of the region and successive central governments vis-à-vis the oil companies, so the two lost what they would have earned if they coordinated their positions and the general lines of the country's oil policy.  
      
    Although the Kurdish negotiators with foreign oil companies have produced contracts that enriched them and the oil and security services companies affiliated with their parties and the families of their influences, we will assume that this enrichment of national wealth was not the main motivation in their decisions, but they really aimed to draw an independent oil policy And the establishment of the international economic and political infrastructure for the independence of the desired Kurdistan Region. This is what they are declaring to the Kurdish citizen, and thus turning any dispute with them into a "betrayal" of the dream of the Kurdish homeland, and every hardship on the way to a price that must be paid to achieve the dream.  
      
    Attracting oil companies to the territory of a country that is a member of the United Nations and a party to most of its agreements, without the consent of the central government, “forced” the region’s implementers to show “greater generosity” than Baghdad towards the oil companies until the latter accepts the contract in such circumstances. The main title of the difference in the region’s contracts with Baghdad’s contracts was the choice of a system of production-sharing contracts rather than a system of service contracts followed by Baghdad.  
      
    With each failed and chaotic licensing round of service contracts in Baghdad, the voices of "economic analysts" and "oil experts" in the region were rising to announce that the "independent oil policy" contracts for the region are better than Baghdad's contracts, and that the region's management model for oil wealth should be the example The role model in Baghdad. And a few were warning from the beginning, as the writer of these lines, of the many consequences that threaten independent decision, waste national wealth and seriously feed corruption as a result of the continuation of this "independent" policy.  
      
    A comparison that has been very late between the policies of the center and the region  
      
    Assuming that the information provided by the Iraqi Oil Minister in his interview with Sharqia is verifiable, and that the information provided in the last report of Deloitte and Touche, which the region's government has hired for its auditing services, is also validly auditable, constructive. On this assumption, we compare the data on the ten-year average in Iraq with the data for the last quarter of 2018 as stated in the Deloitte & Touche report on the Kurdistan region:  
      
    What are the data for the region against the rate of $ 1.41 profit for companies from per barrel production and the rate of 14.3% (an allowance for expenses + profits) for companies from oil sales in Iraq?  
      
    According to the Deloitte and Touche report, for the months of October, November and December of 2018, oil companies operating in the Kurdistan region produced 40,960,333 barrels of oil. It is the sum of what was exported via tubes and masquerades abroad or consumed locally. The total revenue from selling this oil was $ 2,149,809,755. Since we do not have production cost data, we will assume that it exceeds the cost of production in Iraq by 60 cents per barrel. That is, the cost of production in the region is $ 10 a barrel. This means that the total cost of production in the three months is: $ 409,603,330 that the production companies received for bearing these costs. This amount constitutes 19.05% of the total oil sales in the region.  
      
    The total of what these companies received for their production (allowance + profits) in these three months is $ 782,195,553. (In order that the issue not be dispersed, we will ignore the fact that the oil companies operating in the region as a whole complain in their annual financial statements of the irregularity of the region's payments and the failure to fulfill their contractual obligations in full). This means that the total dues of oil companies in the region from sales of their production is 36.38% of the total oil revenues received by the region's government. And if we accept that 19.05% of them are the expenses of production expenses, then the net profits of these companies from oil production in the region are 17.33% of the total oil sales of the region. This is equivalent to $ 9.09 per barrel. Thus, the operating companies in the region receive profits nearly six times the profits of operating companies in the rest of Iraq, and they are not satisfied!  
      
    Someone may say that the foregoing is an injustice to the region that pays loans from its share of oil sales and bears export costs not borne by the Iraqi government, but these Deloitte & Touche report numbers on the value of sales are before subtracting loan service expenses and pipeline oil transportation fees via Turkey. When these expenses are subtracted, the region has a net revenue of $ 784,760,994. That is, the revenues that were entered into the region after the deductions represent 36.5% of the total revenues. That is, the region's net share of oil sales does not exceed 0.12% of the companies' share.  
      
    Where does the rest of the region's share go?  
      
    Deloitte and Touche report data deliberately mixed some items, but what can be concluded is that the Territory government has paid $ 355 million to repay loan installments (assets and interests). And the translation of this is that the region has allocated one third of its revenue from oil sales to paying off loans.  
      
    The standard cost for transporting oil via pipelines in the world is $ 0.50-0.75% per barrel for a distance of every 1,000 miles. However, the region paid to Turkey for the arrival of its oil to the port of Ceyhan on the Mediterranean, through pipes less than 600 miles in length, an amount of $ 3.45 in the three months. That is, the region paid $ 135,581,373 a transportation tariff, which equals 17.27% of the region's share of sales.  
      
    Except for the above, if we look at the report of the months of April, May and June of the same year, which is the last report mentioning oil sales by denouncing it through Iran, we see that the region sold oil denier at a rate less than the sales of the tube by $ 5.54. That is, the region lost $ 2,266,149 in selling oil in denials in just 3 months. During the same period, the Deloitte and Touche report states that the Kurdistan Regional Government paid $ 20 million in law fees to a foreign company that represented the region in a lawsuit filed by Dana Gas against the region in British courts and won it! That is, the Territory paid the $ 20 million to the company that lost the lawsuit.  
      
    Oil, cucumber, tomato  
      
    In one of the negotiating rounds between the representatives of the region’s government and the Iraqi government, the region’s representatives resented a lot when a former minister addressed them, saying that selling oil is not like selling option and tomato ... but looking carefully at the region’s oil revenue and our current financial predicament makes us wish that the sellers of option and tomato are the ones They decide our oil policy!  

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