DNO: Iraqi Kurd oil needs export route

ERBIL, Iraq, Feb. 21 (UPI) -- DNO, the Norwegian oil firm with assets in Iraqi Kurdistan, says it needs a route to send the oil if it's to increase production.

"In 2008, DNO is targeting a substantial resource potential through an extensive exploration program and a step change in production could be achieved once export permit is in place in Kurdistan," Managing Director Helge Eide said in a company statement. "During the last three months of 2007 we have delivered important operational results in Kurdistan. Re-testing of the Tawke-1 discovery well turned this well into the best producer to date and we revised the Tawke gross reserves by 130 percent. In addition we have re-commenced exploration activities in other areas of the PSAs in Kurdistan."

DNO's Kurdistan wells produced 6,301 barrels per day last month, up from 4,194 bpd in December, according to the company. Al-Sumaria TV reports DNO trucks its oil from the Tawke field.

DNO was one of two companies that signed exploration contracts with the Kurdistan Regional Government in 2004. Since then the KRG has passed its own regional oil law and signed 20 more, to the ire of Iraq's national government. The Oil Ministry has called all but the first KRG deals illegal and threatened to blacklist all the companies from future deals in the rest of Iraq.

Very little of Iraq's proven oil reserves are located in the KRG-controlled area, but the country as a whole is underexplored and there are expectations of oil to be found in the Kurds' territory. While DNO has helped prove that expectation true, it and others face a conundrum: what to do with the oil once it's pumped.

All of Iraq, including the KRG, faces a fuel shortage, but there are no refineries in the KRG. None of the region's oil installations is connected by pipeline, either to Iraqi refineries or for export. KRG Natural Resources Minister Ashti Hawrami told UPI in November he's confident he'll connect to the pipeline sending oil to Turkey, though both Turkish and Iraqi authorities have come out against it.