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DNO sees no threat to Kurdistan oil deal
17.11.2006 |
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November 17, 2006
Norwegian oil producer DNO sees no threat to its
output contract in northern Iraq as the Kurdish and
central governments tussle for control of oil, the
company's chief executive said yesterday.
"Nobody in central government has told us they are
concerned about the legality of these contracts,"
Helge Eide told reporters in London.
DNO was the first company to drill for oil in Iraq
after the US-led invasion in March 2003. It intends
to start output in the country's north in the first
quarter next year under a production-sharing
agreement it signed with the Kurdish regional
government (KRG), Reuters reported.
But Iraqi Oil Minister Hussain Shahristani has
insisted on central control of oil and says he wants
to review deals the Kurds have signed with foreign
oil companies, including DNO.
DNO has discussed the production agreements with
Iraqi government officials and has not been informed
of any objections to the contracts, Eide said. |
Oil fields in Kurdistan Region (Iraq) |
"We have had several meetings with people from
central government on these issues and there has
been no
communication back to us of any problems," he said.
Like many other oil companies eyeing potentially
lucrative future production deals, DNO has a deal
with central government to train oil ministry
personnel and share technology, Eide said.
The KRG has offered to share its oil revenue with
Baghdad, he said, and he expected the two to come to
some agreement.
The main sticking point for a policy committee
drawing up a draft oil law for Iraq is whether
development contracts would be signed at a regional
or national level.
The issue is critical to whether more power over
resources will go to the Kurds and the majority
Shi'ites, who populate the oil-rich south. Minority
Sunni Arabs fear regional devolution will leave them
with nothing.
Exports of DNO oil from its 50,000 barrels-per-day
Tawke field in northern Iraq will be pumped through
the northern export pipeline to Turkey.
But to use the pipeline, KRG will have to come to an
agreement on transit fees with central government.
Eide said that he was confident KRG would strike a
deal.
But there is no readily available alternative export
route, so if the deal is not struck DNO would have
to put back the start-up date.
"We have to rely on KRG to ensure this is in place,"
he said. "According to our understanding they are
making good progress."
DNO will build a 50-kilometre pipeline from Tawke to
connect to the northern pipeline to export the oil.
The connection will be far to the north of the
sections of the line that have suffered repeated
sabotage, Eide said.
The northern pipeline has been mostly unusable for
exports from the Kirkuk oilfields to Turkey due to
sabotage attacks since the invasion.
upstreamonline com
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