Oil’s crash below zero last month may have been short-lived — and confined to the US — but it helped ensure that at least one producer was paid absolutely nothing for its crude.
Gulf Keystone Petroleum Ltd., which operates the 36,000-barrels-a-day Shaikan field in northern Iraq, invoiced the Kurdish regional government a “nil amount” for what it pumped in April. The London-listed firm said the monthly average price for Dated Brent was less than the discount for its crude. Gulf Keystone had agreed to sell Shaikan crude at about $21 a barrel below Brent during the month.
It’s unclear whether the company or Iraq’s semi-autonomous Kurdish region ended up footing the bill for the difference, small as it probably was. A spokesman for Gulf Keystone didn’t immediately respond to a request for comment.
Other producers in the Kurdish enclave, including Genel Energy Plc, did get paid last month. Even so, at least a few energy firms operating elsewhere are likely to have met the same fate as Gulf Keystone.
South Sudan’s a possible case in point. The war-torn nation’s Dar Blend and Nile Blend grades of crude often price at a discount to Dated Brent. Operators also have to pay hefty fees to Sudan to transport oil through its territory — those alone can amount to around US$25 a barrel.
The consolation for such companies is that oil’s surge in the past month — Brent futures are up about 70 per cent to almost US$35 a barrel — means they should get at least something for their efforts in May.