Norway’s DNO Dramatically Cuts Back Oil Production In Kurdistan

Norway’s DNO runs the Tawke oil field in Dohuk in a joint venture with Turkey’s Genel Enerji and the Kurdistan Regional Government (KRG). The Norwegian company has dramatically cut back its production at the facility because it doesn’t have an export license. 

From June to September 2009 Baghdad and the KRG agreed to allow the two operating fields in Kurdistan, Tawke and Taq Taq to sell their oil abroad. DNO ramped up production to a peak of 50,000 barrels a day during that period. The deal eventually broke down over who would pay DNO and the other foreign companies. 

Since then, Tawke has only been operating to meet Kurdish demand. Currently the region is awash in oil and gas, and petroleum prices are only a third of global prices at $25-$30 a barrel. Production has dropped as a result to 4,800 barrels a day in March 2010, and 4,000 barrels in November.

DNO is hoping that a new ruling coalition will mean that the regional and central governments will be able to come to an understanding about exports again. The Kurds have included petroleum as one of their major demands in supporting Nouri al-Maliki for a second term as premier. That’s the only way that DNO can hope to make its money back. From July to September it lost $21 million in operating costs.

SOURCES

Bloomberg, “Genel Enerji sells northern Iraq oil stakes,” 10/17/10

Daood, Mayada, “new government must negotiate with krg on oil,” Niqash, 8/13/10

DeYoung, Karen, “As Iraqis forged agreement, U.S. remained influential, administration says,” Washington Post, 11/13/10

Holter, Mikael, “UPDATE 2-DNO says new Iraq govt to boost its oil export push,” Reuters, 11/11/10

El-Tablawy, Tarek and Barzanji, Yahya, “Oil smuggling to Iran embarrassment for Iraq,” Associated Press, 7/13/10