Iraq’s SOMO Starts Settling Oil Payments to Gulf Keystone with Top‑Up Barrels

Iraq’s State Oil Marketing Organization (SOMO) has begun settling outstanding oil payments to Gulf Keystone Petroleum at international prices, the London‑listed firm said on Thursday.

The Kurdistan Region, a key contributor to Iraq’s oil output, has been at the centre of payment disputes affecting crude exports.

Payment Mechanism Initiated

Gulf Keystone said the first cargo of extra crude oil, known as top‑up barrels, was recently lifted after SOMO allocated them under the temporary tripartite export agreements comprising Baghdad, Erbil, and foreign oil companies.

What Are Top‑Up Barrels?

Top‑up barrels are extra amounts of crude oil delivered as compensation instead of direct cash payments. They enable oil corporations to recover the difference between the income previously earned for their exports and the amounts to which they are entitled under global market pricing.

Alignment with 2025 Sales and Receivables

In Gulf Keystone’s situation, the first allocation is designed to align oil export sales in the fourth quarter of 2025 with worldwide prices and begin to reduce the company’s outstanding receivables.

Broader Implications for Iraq‑KRG Payments

The move is a significant step toward completing payment agreements between the Iraqi Federal Government, the Kurdistan Regional Government (KRG), and foreign oil corporations, whose financial conflicts have hampered northern Iraq crude exports and investment plans.

Company Reaction

Gulf Keystone CEO Jon Harris welcomed the decision, citing the commencement of the compensation process as an important milestone for both the company and Iraq’s oil sector.
“The commencement of the top-up payments is a significant positive milestone,” Harris said.
He said that obtaining the company’s entire production‑sharing contract entitlement at international rates was in line with Iraq’s modified federal budget legislation and current contracts.
Harris also praised Baghdad and Erbil’s commitment, saying it improved the investment prospects for Iraq’s oil industry.

Future Steps and Outlook

Gulf Keystone added that it will continue to pursue collection of its remaining outstanding top‑up receivables, since the first allocation does not constitute complete settlement of the sums owing.
The business expects the new payment system to spur more investment in the Shaikan oilfield in Iraq’s Kurdistan Region, where it hopes to develop significant oil reserves and resources.
The declaration provides an initial precedent for paying producers with more crude allocations; however, Gulf Keystone did not specify the amount of the first cargo or the entire remaining balance.
The Shaikan oilfield in northern Iraq was shown in a photograph supplied by Gulf Keystone Petroleum.