In September 2009 the Oslo Stock Exchange announced that they had investigated DNO International, a Norwegian oil company, for insider trading involving the Kurdistan Regional Government’s (KRG) Resources Minister Ashti Hawrami. In October 2008 DNO sold 43 million shares to a then unknown client for $29.7 million. The buyer turned out to be Turkey’s Genel Enerji and Minister Hawrami served as the middleman. The Oslo Stock Exchange originally fined DNO for insider trading, but that charge was later dropped. The company still had to pay $170,00 for keeping part of the transaction secret.
Now that this deal has become public, Minister Hawrami and the KRG have been embarrassed. Kurdistan has suspended DNO’s work for 6 weeks, and demanded that it repair the KRG’s reputation. They have even gone so far as to say that they might void DNO’s contract if they don’t give a proper explanation of what happened. The KRG has also issued a statement saying that no officials benefited from the sale of DNO’s shares, and that they were only trying to help the two companies so that they could work in Kurdistan. The Baghdad Kassakhoon blog points out that Minister Hawrami violated at least two Iraqi laws that ban public officials from taking part in business transactions as well. Since Hawrami is such an important figurehead in the KRG’s attempts to create their own independent oil policy nothing is likely to happen to him.
DNO is one of three corporations, along with Genel Enerji, who are pumping and exporting oil from Kurdistan. DNO operates the Tawke field, which is producing 40,000-50,000 barrels a day, while Genel, along with Addax Petroleum, run the Taq Taq site. On June 1, 2009 the two fields began exporting, although none of the companies have been paid for their work so far, and may not for years.
If the KRG follows through with its threat and ends DNO’s deal to run the Tawke field it could have wide ranging effects upon Kurdistan’s attempts to attract foreign energy companies to invest in the region. The on-going dispute between Baghdad and the KRG over who has the right to sign oil deals and develop petroleum fields has already kept away many major oil companies from operating in Kurdistan. That argument is also preventing DNO, Genel Enerji, and the other companies pumping oil from being compensated. Now, if the KRG punishes DNO that may keep away even more companies who will look at Iraq in general as having a bad business environment.
DNO and Genel Enerji Operations In Kurdistan
DNO owns 55% of the Tawke project and operates it, while Genel Enerji owns 25%
DNO is also working at the Dohuk site with Genel
Genel Enerji owns 44% of the Taq Taq project along with the Swiss Canadian Addax Petroleum
Heritage Oil that is also working on four fields in the KRG recently bought Genel Enerji Kurdistan
Baghdad’s Kassakhoon, “It is still scandal, more to come,” 9/22/09
Bloomberg, “Kurdish minister implicated in Norway,” 9/18/09
Lando, Ben, “DNO’s Iraq operations suspended,” Iraq Oil Report, 9/22/09
Reuters, “UPDATE 1-Iraqi Kurdistan suspends DNO’s oil operations,” 9/21/09
(Al Nasiriya) On February 28 Protesters in Nasiriya, Dhi Qar suspended their actions for three days to see whether their demands will be me...
Dr. Michael Izady of Columbia’s School of International and Public Affairs recently gave an interview to the Swiss-based International Relat...
While the total number of security incidents went down from September to October in Iraq, Islamic State operations in the country have slowl...
Iranian Revolutionary Guards Quds Force Cmdr Qaani has been in Baghdad twice recently to try to talk pro-Tehran groups out of targeting Amer...