In a major step forward for the transparency of the Region’s energy sector and finances, the report details all revenues received by the MNR for hydrocarbons production, as well as all of the MNR’s reinvestment and expenditure to other ministries and projects in the Region. The report details revenues from sales of crude for foreign and domestic use, as well as bonuses from international oil companies (IOCs) for capacity building in the Region, as outlined in the MNR’s production sharing contracts (PSCs).
Overall, between 2007-2013, the MNR has received $9.7 billion in total revenues and spent $8.8 billion in costs (most of which finance other bodies and projects in the KRG), leaving the MNR with a current balance of $920 million. In 2013, however, due to increased payments to KRG institutions, the MNR ran a $1.2 billion deficit, making $2.9 billion in revenues while spending $4 billion. Operationally, however, the MNR became increasingly profitable in 2013, with operational profits jumping 47.3% from 2012 to $1.96 billion.
The report also details the MNRs overhead costs, as well as one-off costs, and its payments to the KRG’s ministries, governorates, and projects. The largest recipient of these payments in 2013 was the Ministry of Finance, which received nearly $1.4 billion last year; $1.1 billion of which was allocated to reimbursements for the fuel provided by the KRG to Kurdish citizens, and $274 million of which was allocated to the easing of liquidity in Kurdish banks. Other major recipients of MNR funds include the Region’s schools and universities, hospitals, and victims of the Anfal campaign. Significant funding has also been allocated to projects in electricity generation and provision, water purification, roads, agriculture and tourism projects.
Additionally, because this report is the first of its kind, data in the report goes back to 2007, providing an interesting look at how both revenues and public spending have risen since 2007. Annual revenue to the MNR jumped from just $29.6 million in 2007 to nearly $2.9 billion in 2013; spending from just $6,382 in 2007 to over $4 billion last year. To provide more insight onto this progress, the MNR has announced that it will release annual reports from each year since 2007 in coming months.
Another notable point in the report is that oil production and consumption from the Kurdistan Region did not reach the 17% of overall Iraqi consumption that the Region is entitled to. The Region produced 239 million barrels of oil, but is owed 339 million in total, leaving an annual deficit of 98 million barrels — a deficit that the MNR is attempting to close soon. The report also demonstrates the dominance of the Tawke and Taq Taq oil fields in terms of production and oil sales. Of the $779 million received in oil sales (including exports) in 2013, the two major fields contributed $745.2 million, or 95.7% of last year’s total sales. As additional fields come online for production in 2014, the number is likely to drop, as production becomes increasingly diversified.