Norway's DNO will expand its successful Tawke project in northern Iraq, moving closer to being able to export oil via pipeline.
Exporting the Kurdistan region oil depends more on politics than geology, however, as the central Iraqi government and Kurdistan Regional Government have not agreed on KRG exports.
DNO announced Friday its Tawke production-sharing contract has been amended and now includes part of the area included in the Dohuk production-sharing contract, as well as a 15 percent working interest increase to 55 percent.
In exchange, "DNO will pre-relinquish most of the Dohuk area, except for the Summail Prospect and the Summail Extension area in the southern part of the current Dohuk contract area," the company said in a statement. It will recover its costs in the Dohuk PSC through the Tawke project.
The company also has a PSC for the Erbil block, which includes the Hawler structure where oil has been discovered and testing continues.
"With these amendments in place, DNO can fully focus on preparing the Tawke field for export and continue the appraisal and delineation of the Hawler discovery towards development," DNO International Managing Director Helge Eide said in a statement. "This, combined with the two retained prospects, brings a good balance between exploration opportunities, field development and production to our asset portfolio in the Kurdistan Region of Iraq."
DNO was one of the first and has been the most successful oil project in the KRG. Baghdad, however, says the regional government has no right to sign oil deals. This dispute may block exports, though Iraqi Oil Minister Hussain al-Shahristani has said DNO as one of the early investors may get the OK, once the federal government and regional government iron out technical issues. The oil would go through the northern pipeline into Turkey.
"KRG has also authorized DNO to proceed with the remaining activities in preparation for export," the company statement said. "This includes preparatory work for the physical tie-in to the Northern strategic pipeline and to perform a compatibility study of the Tawke oil for comparison with the other crude oil qualities currently being transported through the pipeline system."
In July DNO was told by the KRG to stop test production from the Tawke project. The oil produced was being sold to the local market via tanker. The company said production will start next week.
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Ben Lando, UPI Energy Editor
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(e-mail: [email protected])
