DNO upbeat on Kurdish Tawke oilfield

The Norwegian oil producer NGO expects revenues of more than Dh350 million in the first quarter and said its Tawke oilfield in Kurdish Iraq may hold more crude than first thought.

A worker adjusts a valve of an oil pipe in Tawke oil field. Azad Lashkari / Reuters

A Norwegian company that pumps oil in the autonomous Kurdish region of Iraq expects to generate revenues of between 570 million kroner (Dh365.7m) and 600m kroner in the first quarter and yesterday said it may have higher crude reserves at its Tawke field than first believed.

DNO International has kick-started extensive testing of its Tawke-17 deep well, expected to last up to three months, amid hope of unlocking additional deposits.

"We are encouraged by what we have observed … and the test programme now under way represents an important step in hopefully confirming and unlocking the additional deeper resource potential of what is already a world-class asset," said Bijan Mossavar-Rahmani, the executive chairman.

DNO owns a majority interest of 55 per cent and operates the Tawke licence, which includes the first oilfield in the autonomous region to be put in commercial production.

The British-Turkish oil firm Genel Energy holds a 25 per cent interest, while the remaining 20 per cent is owned by the Kurdistan Regional Government (KRG).

The UAE's RAK Petroleum owns a 42.8 per cent stake in DNO, after the two companies completed a share-swap merger last year.

The deal offered the Norwegian producer a cash lifeline as it awaited an end to a continuing dispute between Baghdad and the Kurdish authorities over oil payments.

Relations have soured in recent months, with armed clashes in Kirkuk, a disruption in oil exports from the Kurdish region of Iraq, and threats by Baghdad to blacklist Exxon from further contracts.

Iraq oil exports fell to 2.4 million barrels per day (bpd) last month, compared with 2.5 million bpd in February, according to government data.

The country has lost US$2.4 billion (Dh8.81bn) in revenue since the KRG halted exports through the government-operated pipeline in December, the oil minister Abdul Kareem Al Luaibisaid earlier this month.

Analysts said deepening tension between Baghdad and Erbil were likely to delay further payments to DNO.

"Some measure of dialogue between Baghdad and the KRG is necessary to get those payments," Kjetil Soerum, an analyst with Svenska Handelsbanken, told Bloomberg News in January.

"In the longer term, our estimates rely on more incoming payments. There's no doubt that's in danger now, and that's what the stock market is discounting."

DNO said its working interest production was 29,061 barrels of oil equivalent per day in the first quarter. It had 1.7bn kroner in cash on hand.