Iraq's state-run Basrah Oil Co. has asked international oil companies operating in the region to delay payments to subcontractors and reduce budgets amid the collapse in oil prices. The companies are BP, Eni, ExxonMobil, and Lukoil which operate various fields in Basrah with a combined production of 3 million bpd, more than Iraq’s total output.
Basrah Oil Co has sent letters to those companies, asking to delay or cut payments by 50% in Q1 and Q2, reduce budgets by 30%, reevaluate work programs, and revise contracts with subcontractors by including "deferred payment plans."
Oil income accounts for 90% of Iraq's federal government budget revenue. With Brent prices tumbling to around $25/barrel, Iraq’s monthly revenue is expected to fall to $2.55 billion. This is compared to $6.794 billion/month in 2019 and $5.608 billion/month In January when prices averaged $61.13/barrel and $55.80/barrel, respectively.
The Kurdistan Regional Government has also suffered from low oil prices and struggled to pay IOCs operating there. The KRG cannot pay IOCs due to a liquidity crunch which put its $1 billion of its cash stuck in a Lebanese bank.
