DNO Closer to Kurdish Exports as Turkey Stockpile May Spur Deal

DNO International ASA says it’s closer to selling Iraqi Kurdistan oil overseas as more than a million barrels of crude piling up in storage may help spur regional and federal authorities to resolve a dispute over the proceeds.

“We’re closer than ever,” Chairman Bijan Mossavar-Rahmani said in an interview in Oslo. “The last remaining piece of this is the access to international markets in terms of both security of movement and in terms of payments. And we’re getting there.”

The Oslo-based company and its partner Genel Energy Plc are caught in a dispute between the semiautonomous Kurdistan region and central Iraqi government over revenue sharing, contracts and land. While political negotiations continue, oil producers have this year begun exports through a new pipeline to the Turkish port of Ceyhan, where the crude is stuck pending a resolution.

DNO missed analyst estimates for first-quarter net income, partly because it wasn’t able to book revenue from the oil. The company’s shares fell 1.3 percent to 21.27 kroner by 1:37 p.m. in Oslo after doubling in the past year.

The company, which has been selling its oil locally below international prices, now has “well over” a million barrels stuck in Turkey and storage capacity will be reached this month, possibly within 10 days, at current export rates, Mossavar-Rahmani said.

“Either this will trigger an unlocking of this impasse with respect to Kurdistan exports, or it’ll cause us to try to continue to focus on the local market,” the chairman said.

Export Puzzle

“If by contributing some oil, risking it and betting it’s going to unlock the Kurdistan export puzzle, it’s a heck of an investment to make. I think it’s money and oil well spent.”

Turkey’s Energy Minister Taner Yildiz says the country may begin selling Kurdish oil in Ceyhan this month even without an Iraqi deal. Ceyhan has 2.2 million barrels of oil stored and capacity of 2.5 million barrels, Yildiz said yesterday.

Repatriating the exported crude to sell it at a discount in the Kurdistan market isn’t an option, Mossavar-Rahmani said.

In the past 10 days, Kurdistan’s Tawke field has exported 100,000 barrels a day of its total output of 120,000 barrels. DNO, which operates the field with a 55 percent stake, affirmed plans to raise capacity to 200,000 barrels by the year-end.

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