Gulf Keystone Petroleum, whose main asset is the Shaikan oilfield in the Kurdish region of Iraq, said that it posted a sharp operating loss in for the first half of the year despite reaching record levels of production.
In common with other international oil companies operating in Kurdish region, the company has struggled to get paid by the government for its oil exports. With rising costs, falling oil prices and persistent delays in payments, Gulf Keystone said its expenses outpaced incoming cash in the first six months of the year.
The company reported that its first-half loss after tax widened to US$77.7 million, compared with a loss of $29.8m in the same period last year.
Gulf Keystone said that arrears owed by the government at the end of June stood at $283m.
The loss came despite record daily production hitting 45,000 barrels per day in the middle of this month, with total production in the first six months up 102 per cent at 4.7m barrels.
The company’s chief executive said he hoped an announcement by the Kurdish government on August 3 that it would start making regular payments from next month for oil exports by the international oil companies operating in the region would improve Gulf Keystone’s cash flow.
“There remain a number of challenges for producing operators in the region,” said Jón Ferrier, Gulf Keystone’s chief executive. “Nevertheless, we are making good progress on all fronts … and are cautiously optimistic about the future. Chiefly, we are confident that our host government will be able to deliver on their recent pledge to establish a regular payment cycle for our crude from next month, and will start addressing the amount owed in arrears from 2016.”
Echoing similar comments from the heads of other companies owed a total of billions of dollars in back payments, Mr Ferrier said that clearing those arrears would allow the company to make further investments to lift production and exports of oil further.
The Kurdish regional government has been in a long-standing dispute with the central government in Iraq over the marketing and compensation of the country’s crude oil exports, its main export earner.
A tentative agreement was reached earlier this year which was to see the central government’s oil marketing company sell Kurd oil along with that of the rest of the country, and in return pass through 17 per cent of the Iraq’s government’s revenues, or more than $1 billion a month. But the deal broke down over a number of disputes about its operation and the KRG resumed control over its exports through Turkey to world markets.
Follow The National’s Business section on Twitter