SULAIMANI, Iraq’s Kurdistan region,— Iraqi Kurdistan Region’s Minister of Natural Resources, Ashti Hawrami, proposed a project to the Turkish Minister of Energy and Natural Resources regarding selling part of the oil fields’ divisions in Iraq’s Kurdistan Region for $5 billion, according to a secret document leaked by whistle-blower organization Wikileaks.
Hawrami put forward a three-part proposal to Turkish minister Berat Albayrak through an email sent on 19 March 2016 to sell part of the oil field shares in Iraq’s Kurdistan Region to the Turkish government for $5 billion, the Wikileaks’ documents, which NRT obtained a copy of, reported.
According to the Wikileaks documents, the money that the KRG minister demanded from Turkey would be part of a loan paid to the KRG by the Turkish government.
Hawrami highlighted the KRG’s needs for the $5 billion as below:
First: $1.150 million loan paid to the KRG by the Turkish government.
“To date, the total amount of the Loan paid to the KRG by Turkish side stands at $1,150m (the payment was made in three installment of $500m, $500m and $150m),” the Wikileaks document stated.
Second: $514 million loan from TEC for services to be provided to the Kurdish government. “In addition to these Loans, now the total amount due to TEC for services provided to the KRG is in access of $514 million, and this amount is rising every month.”
Third: $1 billion for payments to Turkish construction and other Turkish contractors to complete the proposed projects.
“The KRG needs immediate funding of around $800m plus a further $1,000m over the next 18 months to pay the contractors to restart and complete these vital projects,” the document added.
Fourth: $700 million to pay companies operating in the Chamchamal and KorMor Gas project. “For various reasons, including the KRG’s financial problems the current Operator of these fields has not been paid by the KRG for its entitled remuneration, which the Operator estimated to be a very large amount … but withheld from the Operator is around $700m, which needs to be settled soon.”
Fifth: Payments of $750 million for implementing the Gas and Oil Pipeline Constructions.
“In order to tie in the new oil discoveries like Shaikan to boost KRG’s oil export and to construct a new strategic gas pipeline to export a 20 to 30 BCM of gas from ChemChemal/KorMor and Miran/BnaBawi projects, the KRG needs to fund the pipeline infrastructure, particularly to enable the gas assets to be developed within the next 2 year,” according to Wikileaks document. “The total costs of these pipeline is estimated to be around $750m.”
Sixth: a payment of $540 million to “support KRG’s reduced budget shortfalls and to protect the 20% Shaikan Government Interest due to KRG’s non-payments.”
The KRG minister also gave three options to the Turkish government to expand its support to the KRG, the Wikileaks report revealed.
In the first option, Hawrami stated that the KRG would pay back the loans as the financial capability of the KRG improved, which was stated as possibly beginning in 2019 and ending by 2021.
“Extend the additional Loans of $3,740m to the KRG in the same way as the existing Loans, to be repaid as the financial position of KRG improves.”
“Extend the additional Loans of $3,740m to the KRG provided that the KRG allocates certain identifiable streams of cash flow from an agreed list of Oil and Gas Assets, or even some Oil Cargos in Ceyhan to the Turkish Side to ensure that all the Loans plus agreed interests are repaid, again the time line to be agreed,” the second option stated.
Hawrami’s third option was that the Turkish government buys the KRG’s shares in the Kurdistan Region’s oil fields.
“Rather than just being offered the cash flow of the Oil and Gas Assets, the KRG prefers and proposes that the Turkish Side be assigned the long-term working interests and benefits of these assets,” the document said.
“In this case the Turkish Side may benefit more from any upside profitability of these Assets, but the KRG will also offer a guarantee to the Turkish Side against any possibility of underperformance of the Assets.”
Hawrami also offered three proposals for his Turkish counterpart regarding the third option referred to in the email.
The first proposal stated that the Turkish government buys the shares of TaqTaq, Tawke and Shaikan oil fields from the KRG.
“The KRG proposes the Turkish Side considers converting the current outstanding Loans and the TEC outstanding entitlements to a long-term investment in the TaqTaq, Tawke and Shaikan producing Fields … The KRG proposes to transfer these assets to the Turkish side on an 8% discount basis.”
In the second proposal Hawrami offered the Turkish government the option to buy the KRG’s division in the BnaBawi and Miran projects.
“These two streams of free cash flow are expected to generate $2,705m at 7.5% discount (7.5% interest rate). The KRG proposes to transfer these assets to the Turkish Side on a 10% discount basis.”
In the third proposal, the KRG minister offered the Turkish government the option to buy the KRG’s division in the Khurmala oil fields.
“KRG proposes that the Turkish Side considers advancing a further new payment to the KRG, again not as a loan, but against KRG assigning 50% net working interests in the Khurmala Field – in both the Shallow and the Deep reservoirs. The current operator to retain 30% working interest and the KRG to hold 20% carried interest.”
The Wikileaks document reveals the complete amounts, and documents of the KRG’s divisions in the oil fields, and all the ways proposed of selling them to the Turkish government for receiving the $5 billion.
Kurdistan considered as the most corrupted part of Iraq. According to Kurdish politicians and observers billions of dollars are missing from Iraqi Kurdistan’s oil revenues.
Senior KRG officials including Kurdish leader Massoud Barzani have long been accused by the opposition and observers of corruption or taking government money.
Lawmakers and political figures have previously criticized and accused the KRG of not being transparent with oil exports and revenues.
Members of Kurdistan Parliament have claimed that millions of dollars have gone missing from the region. The region’s Ministry of Natural Resources has rebutted those accusations as unfounded.
Many Kurdish politicians and observers believe that many of the oil industry projects in Iraqi Kurdistan are conducted in a non-transparent way. Some have even described them as secretive.
Source: http://ekurd.net/kurdistan-sell-oil-fields-turkey-2016-12-27