DNO revises pact in Iraq crude exports push
Oslo, March 15, 2008
Norwegian oil company DNO said it took an 'important step' towards gaining a permit to export oil from Iraq by revising its production licence deal with north Iraq's Kurdish authorities.
DNO shares leapt more than 20 per cent even though the revision effectively reduced DNO's stake in part of a northern Iraq oil production licence.
'This (revision) is an important step in the direction of exports,' DNO chief operating officer Ivar Brandvold said.
'Our next task is to get into an export situation, as the Kurdistan Regional Government has commented. We don't want to speculate on the timing (of any export deal),' he said.
Shares in DNO, boosted earlier by upbeat test well results in a new production area in Kurdistan, surged further on Brandvold's comments.
So far, DNO has sold oil from its Tawke field in Kurdistan on the local market after repeated delays to its strategic plans to export the oil via Iraq's northern pipeline to Turkey.
The first foreign firm to drill for oil in Iraq following the US-led invasion, DNO said the revised deal divided its Dohok licence into two parts - one for its Tawke field now in production and one for the remaining Dohok area.
After the revision, DNO holds three production sharing contracts in Kurdistan - the Tawke PSC with a working interest of 55 per cent, Dohok PSC with an interest of 40 per cent and the Erbil PSC with an interest of 40 per cent, the company said.
Previously, DNO had a 55 per cent interest in Dohok PSC, after raising it from 40 per cent in 2005 in a deal aimed at quickly developing Tawke and recovering investment costs.
'The terms of the PSC contracts provide a solid basis for creating substantial values to our shareholders, the region and all of Iraq,' the Norwegian firm said.
The Kurdistan Regional Government's Minister for Natural Resources Ashti Hawrami said the local authorities, which have been battling Baghdad for control over their resources, were satisfied with the review outcome.
Hawrami also said that Kurdish authorities were working to enable DNO to export its oil.
DNO has repeatedly said the timing of exports depends on the Kurdish authorities striking a deal with Baghdad, which controls Iraq's pipeline system.
'With very promising well-testing in recent months, DNO are ready to export oil from the region, and we will ensure that they are able to do so,' Hawrami said.
'This will be a tremendous benefit for the region and all of Iraq,' he added.
The revision was needed to 'bring the PSCs into conformity with the oil and gas law of the Kurdistan region,' said DNO.