Gulf Keystone Petroleum, one of the major operating oil companies has suspended oil exports to Turkey, as it is owed payments from the Kurdish regional government. In November, Gulf Keystone said it was owed about $100 million.
"Small- and medium-sized oil companies are eager to get paid, but the financial situation in the Kurdish region will not allow that to happen any time soon," Shwan Zulal, head of the London-based Carduchi Consulting told The Anadolu Agency.
Zulal stated that international oil companies have made their circumstances known in the past couple of weeks, and the Ministry of Natural Resources for the region sees the urgency in resolving the matter.
"The prospect of significant payments is unlikely any time soon, given the fact that the region is at war with the Islamic State, and so far has not been able to receive their share of oil revenue payments from Baghdad. This is combined with low oil prices that are not producing sufficient revenue for Baghdad to make payments," Zulal said, using an alternate name for the militant group Islamic State of Iraq and the Levant.
In December, the Kurdish and Iraqi central governments brokered a deal ending a long period of dispute over how oil revenues should be shared between the central government and the Kurdish region. This agreement envisages 250,000 barrels of Kurdish oil per day to be sold via the national oil company SOMO, and for Baghdad to send 17 percent of the budget to Erbil.
But the budget is showing a fiscal deficit of $21.4 billion largely due to low oil prices, and thus Baghdad has not yet sent any payments to the Kurdish regional government.