25 Aug Genel and DNO reach long-awaited agreement with Kurdistan over oil payment disputes
Genel Energy (LSE:GENL) and DNO (OSE:DNO) of Norway have arrived at a landmark agreement with the Kurdistan Regional Government (KRG) over unpaid entitlements of previous oil sales.
The KRG owed sizable sums of money to the two foreign oil companies dating from a period between 2014-15 when the Iraqi semi-autonomous state was afflicted with a series of difficulties.
During this period, the Iraqi central government was withholding budget payments to the KRG, which was having to divert funds to the fight against Islamic State, all the while taking place against a backdrop of the crash in oil prices.
Monthly payments to foreign oil firms resumed in 2015, but Genel claimed it was owed more than US$471.2 million in receivables, while DNO said it was carrying $58 million on its balance sheet in relation to export sums owed from Kurdistan.
However, the dispute with the firms was settled when the KRG awarded DNO an additional 20% stake in the Tawke oilfield, boosting the firm’s overall holding to 75%. Genel owns the remaining 25%.
DNO will also receive a further 3% of revenues from the field for five years, while Genel has been given an extra 4.5% cut of the revenues.
“This definitive agreement is the positive culmination of a constructive dialogue with the KRG, and promises to generate value for all stakeholders,” said Genel’s chief executive Murat Özgül.