DNO pours Kurdish oil back to local market
Norwegian exploration and production firm DNO has announced that it is redirecting nearly a third of its oil production in the Kurdish region of Iraq for sale in the domestic market.
DNO said the move "will improve predictability and stability of its revenue stream."
The company recently signed contracts with three buyers for delivery of around 675,000 barrels of oil from the Tawke and Bastora fields at prices ranging between $ 50-55 per barrel. Daily deliveries into these contracts are averaging 10,000 bpd. Payments are received in advance of deliveries and accrue fully to DNO's account.
"At current rates, DNO's local sales bring another $ 15 mm in payments to the company on a monthly basis which allows our operations to be self funding across our portfolio," Helge Eide, President and Managing Director said.
The company says exports have declined to around 25,000 bpd on account of "technical glitches" with the North Iraq pipeline.
However, political problems are the main factor holding back Kurdish exports. Iraq's deputy prime minister, Hussein al-Shahristani, recently re-affirmed his uncompromising view that all Kurdish production-sharing agreements -- including DNO's -- are illegal and must be re-written as technical services contracts in order to comply with the Iraqi constitution.
DNO has received payments of $ 60 mm from the Kurdish government in September and $ 104 mm in June under a temporary deal struck between Erbil and Baghdad.
"What the KRG had asked the Iraq government is to pay them (companies) for the actual capital that was invested in drilling wells and making service facilities that are the property of Iraq," Shahristani explained at an energy conference in Oslo. "These are only the capital expenses that the KRG has spent on developing these fields. As far as we are concerned they have nothing to do with the contracts, or with the companies."
DNO also announced that it has completed the severance of its commercial interests with those of its former chairman Berge Gerdt Larsen.
