RAK chief sees upturn for DNO after board win
Oslo, June 11, 2011
The chief executive of Dubai-based RAK Petroleum said his surprise election as chairman of Norway's DNO will improve the Norwegian company's chance of gaining a profitable long-term export deal in Iraq.
DNO was the first western firm to sign a production contract in Iraq after the 2003 U.S.-led invasion but saw no payment for exports from its Iraqi Tawke field until the Kurdish regional government released $104 million in recent weeks.
'The expectation is that the contract (for continued export profits) will be honored,' Bijan Mossavar-Rahmani, DNO's new chairman, told Reuters on Friday.
He added: 'We have already been involved behind the scenes for some time trying to facilitate the process.'
DNO has had net losses the past four quarters -- including 65 million crowns ($11.9 million) last quarter -- while hoping Kurdish officials and Iraq's central government would end a dispute hindering contractual export income from flowing to producers.
'Given the cultural ties and political ties and relationships, we believe we would be a stronger voice at the table in promoting and pursuing the interests of DNO,' said Mossavar-Rahmani, whose Emirati firm owns 30 percent of DNO.
On Thursday, the Iranian-American ousted longtime DNO chairman Berge Gerdt Larsen in a manoeuvre that the Norwegian complained was sprung half an hour before a sparsely attended general meeting in Oslo. RAK's stake swung the vote.
'This is not about the management, or the Arabs coming in or a merger,' Mossavar-Rahmani said. 'It's about a 30-percent shareholder taking a larger role in the board of the company and its direction.'
He promised 'a new DNO' with better governance, more transparency and a quick paydown of some $250 million to $300 million in debt.
'It's irresponsible to take on large debts that you can't service because you have no revenue,' he said. He called such borrowing 'a recipe for disaster' and said DNO's losses had been a drain on RAK's coffers.
Another mistake by DNO, he said, was to acquire an exploration block in Mozambique in 2003 that has yet to pay off. Selling the acreage, he said, was now 'a possibility'.
We will have to look at the portfolio,' he said. 'We will have to do a rebalancing, perhaps.'
A spokesman for Larsen, Geir Bjoerlo, said the ousted DNO veteran 'does not want to participate in the chairman's public discussions and encourages the chairman to focus on creating shareholder value, not creating ink for the press'.
Privately held RAK Petroleum posted Dh5.9 million ($1.6 million) in net profit last quarter from oilfields in Oman and the UAE. The company's DNO stake is its largest asset, Mossavar-Rahmani said. – Reuters