DNO gains oil lead in the Kurdish north of Iraq

Economy

2017-09-08T19:08:00+00:00

The foot is "on the accelerator" for Kurdish oil operations with new assets gained through a deal with Exxon Mobil, Norwegian energy company DNO said.

The Norwegian company, which has a core focus on oil basins in the Kurdish north of Iraq, said it assumed the role of operator after acquiring 50 percent of Exxon Mobil's stake in the Baeshiqa reserve area. DNO joins a consortium that includes Exxon, the Turkish Energy Co. and the semiautonomous Kurdistan Regional Government.

"We bring to the project a 10-year record of successful and fast-track operations in Kurdistan, culminating in more than 200 million barrels produced to date," Bijan Mossavar-Rahmani, the company's executive chairman, said in a statement. "Following regularization of export payments and a landmark agreement with the (Kurdish) government to close out our historical receivables, our foot is back firmly on the accelerator."

Oil leaves the Kurdish region from a pipeline and by trucks to a Turkish port at Ceyhan. DNO said Exxon's early efforts at the Baeshiqa reserve were disrupted by security concerns related to the regional fight against the group calling itself the Islamic State.

Budgetary constraints for the Kurdish government caused contractual issues with international energy companies working in the region in the past. With more than a dozen consecutive monthly export payments, DNO said it was now ready to ramp up activity across its Kurdish portfolio.

Revenues in the first half of the year for DNO were up 43 percent in part because of regular payments for exports by the Kurdistan government. Free cash flow jumped by a factor of four.

DNO is the operator at the Tawke and Peshkabir oil fields in the Kurdish north, which combine for production of around 110,000 barrels of oil per day. The company said Exxon already conducted extensive studies of Baeshiqa and said, pending the government's approval, exploratory work is set for the first half of next year.

Iraq is party to a multilateral effort to ease supply-side market strains with managed production cuts, but balked initially at the decision. Since the agreement went into force in January, the central government in Baghdad accused the Kurdish government of not contributing. A Kurdish referendum for independence is scheduled for late September.