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Norwegian oil company DNO International Resolves Kurdish Oil Dispute

By Germaine Lombardo for CEOWORLD Magazine Updated:October 6, 2009

Norwegian oil company DNO International (DNO.OL) said on Tuesday it was restarting operations in northern Iraq after settling a row with Kurdish authorities.

However, DNO said it will be unable to export oil from Kurdistan until a future payment system for crude sales is agreed, and will instead focus on local sales.

“All issues with respect to the Notice from KRG have now been resolved and DNO is looking forward to continuing its successful cooperation with KRG to the benefit of the Kurdistan Region and all people of Iraq,” the company said in a statement.

DNO’s oil production in the Kurdish region was between 43,000 and 45,000 barrels per day before the shutdown, but following the restart it will be restricted to the 6,000 to 7,000 barrels of oil the company sells locally, said a DNO spokesman.

DNO has not been prevented from exporting oil, but there is still no agreed mechanism for the Baghdad government to pay companies for the oil they export from the Kurdish region, the spokesman said. Until this is agreed, DNO will focus on producing oil for local consumption that it knows it will be paid for, he said.

The company declined to comment on the continuing investigation by the Norwegian authorities.

Despite the lower output, the resumption of operations is obviously good news for DNO, said Arctic Securities analyst Trond Omdal, noting that the restart has also come a week or two earlier than expected. While it is difficult to be 100% sure of the political situation, “the conflict with the Kurdish Regional Government seems to be resolved,” Mr. Omdal said. However, that DNO hasn’t been able to resume oil exports shows, “they still have some conflict with Baghdad, which will likely linger until after the election,” he added.

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