Glencore Plc has restructured a $500 million oil-for-cash loan to Kurdistan in northern Iraq, reducing payments for 2020 as the semi-autonomous region struggles due to low petroleum prices, Bloomberg News reported. The pre-payment deals have been popular among some African and Middle Eastern producers with few others ways of raising funds. But they have also proved controversial, in some cases creating an opaque form of debt that puts governments’ finances under strain when oil prices drop.
As Iraq inches toward the formation of a new government, the risks are stacking up for OPEC’s second-biggest crude producer, Bloomberg News reported. Beyond the country’s long-standing sectarian tensions, frayed relations with the Kurdish north, a bloated public wage bill and endemic corruption, new Prime Minister Mustafa Al-Kadhimi now has to grapple with a collapse in oil revenue and the fallout from the Covid-19 pandemic. Little wonder that the country is seeking financial aid from the U.S.
Investing in small-cap oil and gas explorers has never been for the faint-hearted. But few companies have experienced as much drama in the past five years as the international energy groups with assets in the autonomous Kurdistan region of northern Iraq, the Financial Times reported. Once described by Tony Hayward, the former chief executive of BP and a co-founder of Kurdistan-focused Genel Energy, as “the last big onshore ‘easy’ oil province”, operating in the region proved to be anything but simple.