OREANDA-NEWS.  The oil ministry (MNR) of the Kurdistan Regional Government (KRG) has damned the political parties of the semi-autonomous region of northern Iraq for undermining oil industry confidence and hindering moves to shore up the parlous finances of the region. It urges them "to put aside their narrow and often damaging self-serving agendas [and] not to use oil as a political football".

In a long statement, it said political infighting is "undermining our ability to maintain the trust of the buyers and the oil company investors in our region".

Political strife has slowed the finance ministry's budgetary reform programme and delayed agreement to the oil ministry's proposal to boost oil sales independent of Baghdad, said the MNR. The MNR said it urged action in "late spring" to respond to the "inability or unwillingness of Baghdad" to pay the expected $1bn a month of revenues due under the December 2014 oil-export agreement, but that it was mid-June before the political parties "reluctantly agreed" to increase KRG direct sales of crude to 500,000 b/d at the expense of agreed transfers to Iraq's state-owned marketer Somo. The decision took effect on 24 June, it said.

The assumption was that an average netback of $55/bl for the rest of 2015 would be achieved, generating some $850mn/month for the KRG. The MNR signed contracts with buyers and persuaded unnamed traders, who had made pre-payments, to delay receiving crude until next year. By 20 August the KRG had received $1.24bn, with another $187.5mn due today and $125mn more expected by 24 August.

The MNR said it is well ahead of schedule for achieving money for oil sales. But it acknowledged not all of the money has reached the region, in part for technical reasons but also because of "direct political interference by some people" in the finance minister's own political party.

The KRG exported 517,000 b/d on its own account in June, dropping to 492,000 b/d last month. The end of July was impacted by an explosion on the export pipeline at the end of the month. Pipeline disruption means August KRG exports have only been running at around 140,000 b/d this month. The reduced flows have deprived the KRG of over $500mn of revenue so far, the regional government said earlier this week. Not only does this squeeze the KRG's ability to fulfil pressing social and security requirements, it also crimps its ability to pay the foreign oil companies operating the fields it relies on for crude. It said it would devote some of the oil revenues to paying producing companies enough "to cover their ongoing expenses". Norwegian independent DNO said yesterday it expect the KRG to make a total payment of $75mn-$100mn to foreign producers in September, but this is a drop in the ocean considering DNO said it is owed around $1bn, London-listed Genel is due $378mn and London-listed Gulf Keystone $100mn.