November 24, 2021 | oil and gas

Oil revenue reaching finance ministry a third of what it should be: Kurdistan parliament speaker


ERBIL, Kurdistan Region - The amount of money that the Kurdistan Region’s finance ministry collects from oil revenues is around a third of what it should be receiving, the speaker of the Region’s parliament told reporters in an interview aired on Monday claiming that not all revenue enters the finance ministry.

“When you think of oil revenue, the amount that enters the finance ministry is not natural, it is $350 million, but when you calculate it is around $900 million,” Rewaz Fayaq told reporters in an interview recorded on November 15.

“Not everything enters the finance ministry,” the parliamentary speaker added.

According to data published by the Kurdistan Regional Government (KRG) in October, the government’s average revenue from oil in the first six months of the year was around $350 million, however the revenue declared by the KRG was after its payments to oil companies in the Kurdistan Region.

Kurdistan Region's Minister of Natural Resources Kamal Atroshi attended a parliamentary session in late June to answer questions about the government's finances. He said at the time that 40 percent of the money from oil sales is spent to cover oil sector costs - 20 percent for production costs, 14 percent in payments to international oil companies, and around six percent for transportation.

Atroshi added that at times, because the government is repaying its debts to the oil companies, costs reach around 58 percent of the total income.

There are 52 oil blocks in the Kurdistan Region, 16 of them are in production and 15 are in the exploration phase. Over 30 international and local companies are working in the sector. Many of the contracts were signed with prepayment schemes, and the Kurdistan Region owes a large amount of money.

Despite the Council of Ministers Secretary General Amanj Raheem previously claiming that the KRG owes around $4.3 billion to oil companies, in a roundtable meeting with journalists in October Atroshi said that the debts the KRG owes to companies is significantly less than $4 billion.

With the recent spike in oil prices, the KRG has also been more active in repaying its debts to oil and gas companies. Earlier this month, the UAE-based Dana Gas company that operates in the Kurdistan Region said that the KRG has paid the company $150 million in the first ten months of 2021, clearing its debts from 2019 and 2020.

The KRG’s improved financial situation can also be seen as the KRG has begun paying salaries in full over the past few months. The government had previously failed to do so due to the war against Islamic State (ISIS), record low oil prices, and budget disputes with Baghdad.

The Kurdistan Region Finance Minister Awat Sheikh Janab on Sunday told Rudaw’s Sangar Abdulrahman on the sidelines of the Manama Dialogue in Bahrain that the KRG has been doing better financially and that can be seen by its administration of salaries.

However despite the Kurdistan Region developing financially, thousands of people are attempting to migrate from the country.

Thousands of people, many of them Iraqi Kurds but also citizens of Syria, Yemen, and Afghanistan, have traveled to Belarus in recent months with the hope of reaching western Europe where they dream of better lives with more opportunities. However, most have gotten stuck on Belarus’ borders with Poland and Lithuania, who have fortified their frontiers against the migrants in response.

The dire condition of thousands of people, young and old in the cold with little food and water, has grabbed international headlines and mobilized Europe to cut off the migration route. Earlier this month Belarus cleared a makeshift border encampment, sending over a thousand migrants to a nearby logistics centre, according to AFP.

The Iraqi government and the KRG have begun registering the names of those who want to voluntarily return home. Over 400 people returned on Thursday, 95 percent of whom were from the Kurdistan Region.

The KRG has said that the main reason behind the mass migration is due to political manipulation and some human trafficking bands that have deceived these people. However, Fayaq said that the majority of those migrating abroad are doing so in search of a better life.

“Realistically, part of it has to do with unemployment.... some are employed and they might have a car and a house and a decent life, but they are in search of a better life which is rightful.... some of it has to do with a lack of hope,” Fayaq said, adding that around 90 percent of the people migrating are due to one of those cases.

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