Khaled Salih, Senior Advisor to the Prime Minister and the Minister of Natural Resources, KRG (Kurdistan Regional Government), holds a press briefing in Oslo September 27,2009. Northern Iraq's Kurdish region on Friday said it was "hopeful" of settling a row with Norwegian oil firm DNO International that led to the suspension of the firm's activities in Iraq. The dispute threatens to taint the KRG's business-friendly image and could even deter investors considering Iraq's crumbling national oil sector that, although promising, is already beset by legal ambiguity and security risks. REUTERS/Kyrre Lien/Scanpix
(NORWAY POLITICS BUSINESS) NORWAY OUT. NO COMMERCIAL OR EDITORIAL SALES INNORWAY
Christoph Bangert for The New York Times
Kurds have built rough homes in Kirkuk near oil fields on land the government says is not theirs.
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By TIMOTHY WILLIAMS and SUADAD AL-SALHY
Published: May 28, 2009
KIRKUK, Iraq — Sheik Habih Shawqi Hamakan peered through his binoculars on a recent afternoon at a sight he considers, despite the rising columns of black smoke that blot out the sun, pure beauty.
As far as the eye can see are oil fields, among the most productive in Iraq. He turned, gesturing to his rambling two-story house with its garden of blossoming pink and yellow rosebushes. That, too, sits on an oil field.
The sheik is one of thousands of Kurds who have moved to Kirkuk, an unstable oil town in northern Iraq, since the 2003 United States-led invasion and claimed plots of land not theirs to build houses. Some of the homes, illegal facts on the ground aimed at furthering Kurdish claims to Kirkuk, sit a mere half mile from towering flames of natural gas among the oil fields.
Their presence is one of many pressure points converging at a critical time in Kirkuk, as rights to those fields are scheduled to be awarded to the highest bidding international oil company next month as part of Iraq’s larger effort to bolster its slumping economy by nearly tripling oil production over the next six years.
Kirkuk Province, wedged between Kurdistan and the rest of Iraq, is smaller than Connecticut but produces as much oil as Alaska. It is believed to possess as much as one-sixth of Iraq’s total petroleum reserves.
Both Kurds and the central government have long claimed Kirkuk as their own — and many residents and Western observers fear that the awarding of the contract, along with the bonanza of jobs and cash expected to follow, may decisively stoke hostility among the Kurds, Arabs and Turkmens who live here. Many worry this may tear at Iraqi unity and embroil the disputed territory in greater violence. At worst, it could bring the open ethnic warfare that many have predicted since security for the province was handed over to Kurdish forces after the 2003 invasion.
Any dispute over Kirkuk is of concern to Turkey, Syria and Iran, each with a minority Kurdish population, and could ignite simmering Arab-Kurdish tensions throughout northern Iraq, the country’s most restive region.
Still, even though the status of Kirkuk remains unresolved and it is unclear how much oil actually lies beneath it, many of the world’s largest oil corporations are competing for the contract here. It is one of eight large but underperforming oil and gas fields throughout Iraq for which the government is scheduled to award production rights at the end of June.
“By opening bids on fields in Kirkuk, Prime Minister Maliki is clearly poking the Kurds in the eye by asserting Iraqi sovereignty over oil in territories whose status is constitutionally in dispute,” said Joost Hiltermann, an Iraq expert at the International Crisis Group.
In recent weeks, even after a summit meeting in Berlin among Kirkuk’s Arabs, Kurds, Turkmens and Assyrians, violence in the province has increased. This spring, Kirkuk city has been rocked by car bombings, shootings and suicide attacks that have killed at least a dozen police officers, three Assyrian Christians, a high-ranking Arab police official and workers going to the oil fields.
Kirkuk’s predominately Kurdish security forces say they need help controlling the violence, but not from the largely Arab Iraqi Army troops stationed on the city’s outskirts. The American military held a series of meetings with Arab and Kurdish political leaders and security forces this month without reaching an accord to allow an Iraqi Army unit to operate in the city.
“We hope it is not going back again to very serious violence, but all signs are that it will,” said Maj. Gen. Turhan Abdul Rahman Yasif, deputy chief of the province’s police force.
A United Nations report last month offered several recommendations to reduce tensions, including making Kirkuk a region jointly administered by Iraq and Kurdistan. Residents would ultimately hold a referendum to decide their future.
Kirkuk’s population of Kurds, Arabs, Turkmens and Assyrian Christians generally live apart from one another in mutual suspicion. The other groups accuse the Kurds of seeking to annex Kirkuk and its oil wealth into the semiautonomous Kurdistan Regional Government, which could give Kurdistan the economic underpinning to become an independent state.
But there has been almost no oil exploration in Iraq for decades. The Oil Ministry says Kirkuk contains about 15 billion barrels of oil, or 16 percent of Iraq’s total, and 2 percent of the world’s proven oil reserves.
But most oil industry estimates put Kirkuk’s reserves at between 5.5 billion barrels and 10 billion barrels.
Revenue Watch Institute, a New York-based nonprofit natural resources policy group, estimated in a 2006 report that 62 percent of Kirkuk’s petroleum had already been extracted.
“That means this super giant field is at the final stages of its life,” the report said.
But Mena’a Abdullah Alubaid, director general of Iraq’s North Oil Company, a branch of the Oil Ministry that oversees Kirkuk’s fields, insists that the fields will last until 2074.
Wayne Kelley, managing director of RSK Ltd., an independent oil engineering firm, said the petroleum company that ultimately wins the Kirkuk field would face issues including the potential for violence and the likely contamination of part of the field with waste oil.
“Nowhere in the world has a field of anywhere near this size been so grossly mismanaged,” he said.
Another significant impediment could be the growing population of Kurdish settlers, many of whom have built homes on land that the Oil Ministry says is not theirs.
The families say they were forced out of Kirkuk by Saddam Hussein’s government, which bulldozed their villages. They call the contested city their “Jerusalem,” and some said they would take up arms to stay.
Sheik Hamakan, 60, said that after years of exile in Iran and elsewhere he had finally satisfied his longing to be home. He will not, he vowed, stand aside for government bulldozers to raze his family’s house a second time.
“I won’t leave,” he said. “It would be up to them to demolish the village on my head.”
Reporting was contributed by Riyadh Mohammed, Abeer Mohammed, Sam Dagher and Mohamed Hussein from Baghdad, and Tareq Maher and an Iraqi employee of The New York Times from Kirkuk.
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In Iraq, oil is literally bubbling to the surface
April 24th, 2011
Neil King at the WSJ has an article on wild frontier of Iraqi oil exploration in Kurdistan – Wildcatters Plung Into North Iraq. No doubt they’ll find lots of the stuff.
The Canadians are squeezing oil from sand.
The Brazilians want to nurse it up through miles of seawater, sandstone and salt. But here in the far north of Iraq, oil is literally bubbling to the surface.
Oil executives lament that the age of “easy oil” is over.
It isn’t over here. For companies that have stumbled into this corner of Iraq known as Kurdistan, it’s an era that has just begun.
“Look at this,” said Magne Normann, Middle East director for DNO International ASA of Norway, as he stood beside a pond of oil oozing up on a hillside.
For fun, he heaved in a stone.
“What a sight,” he said, as the liquid shot three feet high. “Pure oil.”
Iraq is well known as one of the planet’s last great oil repositories, with more than 115 billion barrels of reserves, by most estimates.
The surprise is how much oil — and easily accessible oil — there appears to be in Iraq’s Kurdish region, a rugged, Switzerland-size area that has seen centuries of conflict but essentially no oil exploration, until now.
One of the world’s most prolific oil fields, the Kirkuk field, sprawls for more than 70 miles just to the southwest of the Kurdish region’s border.
After 74 years in production, it still churns out over 400,000 barrels a day. Dozens of similar geological structures extend far to the north in Kurdistan, undrilled and almost entirely unexamined.
“I am not expecting to find another Kirkuk,” says Ashti Hawrami, Kurdistan’s plain-talking minister of natural resources.
“But I think we will find a lot of fields that add up to Kirkuk.”
The hubbub is in sharp contrast to the rest of Iraq, where an exploratory well hasn’t been drilled in 15 years, thanks to neglect throughout the Iran-Iraq war, the period of international sanctions and then the war that began in 2003.
Major oil companies have entered talks with Baghdad over ways to boost output in the huge fields in Iraq’s south.
But the Iraqi government remains loath to grant outsiders the right to explore for new oil or to share in the profits. …
Companies signing deals under the Kurds’ law have since been barred by Baghdad from doing business in the rest of Iraq, where the biggest of the country’s oil fields lie.
That threat is keeping the major oil companies out of Kurdistan, despite their ardor for new terrain to drill.
Meanwhile, until Iraqis can agree on a national oil law, the companies drilling in Kurdistan have no way to export oil they unearth.
http://createcompany.org/
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Wed May 11, 2011 1:34am EDT
DNOs production in the first quarter of 2011 was 39,945 bopd, up from 12,442 in the same quarter last year. Commencement of crude oil export from Kurdistan in February 2011 was a milestone for DNO.
"DNO is producing high volumes of crude oil in Kurdistan. A first cash advance to DNO of USD 110 million has now been confirmed by the Kurdistan Regional Government and forms a basis for increased activities by DNO in Kurdistan going forward", says Managing Director Helge Eide.
Sales increased to NOK 281.2 million in the first quarter this year (export revenues from Tawke not included), up from NOK 258.6 million in the same quarter 2010. EBITDA was NOK 146.3 million in this quarter, down from NOK 155.6 million in the first quarter 2010. The somewhat lower EBITDA is mainly explained by lower achieved oil price and higher expensed exploration costs.
Revenue from export sales has not been included in the financials for Q1 2011. However, DNO has now received confirmation from the Kurdistan Regional Government (KRG) that cash advances will be made by the KRG to companies exporting oil from the Kurdistan Region in Iraq. An amount of USD 110 million will be released to DNO by the KRG as payment against some of the amounts due in respect of the Tawke PSC.
For more information, see attached press release, quarterly report and webcast presentation.
DNO International ASA will hold a presentation at 08:00 CEST today at the Oslo Konserthus in Oslo. A webcast of the presentation is available on DNO's web site, www.dno.no.
Oslo, 11 May 2011
DNO International ASA
Corporate Communications
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Q1 2011 Webcast presentation
Q1 2011 Quarterly report
Q1 2011 Press release
===
There's a buzz going around that Swara Tika-1, just N of Atrush and SH, has hit lots of oil.
Rights are owned by Hillwood Int Eneregy (75%) and Marathon (25%). Hillwood is one of Ross Perot's private companies so only way in is via MRO.
If you look at the map of Iraqi discoveries, there could now be a ginormous green splodge now stretching from the Hunt Oil well at Aint Sifni, thru SH and Atrush into Sarsang/Swara Tika.
Maybe the cause of today's rise?
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Iraq’s Moment
Posted: May 10, 2011
The base of Iraq's development centres around its oil industry. Although analysts think that Iraq has barely scratched the surface of its oil reserves, the country is already the world's 12th largest producer of crude.
Tags: Economic growth, Gross domestic product, International Monetary Fund, Iraq, Iraqi government, middle east, Politics of Iraq, United States 0
Iraq’s strong oil revenues this year, coupled with a new $37-bn
investment plan, will ensure double-digit hike in GDP this year. However, political and security issues could derail growth.
Iraq’s expected double-digit growth this year is a reflection of high oil prices more than anything else, but the government has a chance to build on this windfall with the $37-billion development programme announced in late April.
With Iraq sitting on the fourth largest oil reserves in the world, foreign investment can flow quickly if the government can improve security and keep other key economic indicators at favourable levels.
But with the latest political changes sweeping across the region, Iraq has to navigate through a multitude of internal and external challenges, before it can leverage its oil-led growth.
Article
With Libya, Syria, Egypt and Yemen grabbing all the headlines, it is easy to lose sight of some of the countries in the region that are quietly progressing along.
Apart from Qatar, Iraq is the only other economy in the region expected to post double-digit growth this year, according to the International Institute of Finance (IIF). The banking body expects Iraq to post an 11% GDP growth in 2011, second only to Qatar’s 18.1%.
The International Monetary Fund expects Iraq to grow at 9.6%, with inflation at a reasonable 5% and nominal GDP reaching $108-billion – the first time it will cross the $100-billion mark.
But Iraq is hardly a paragon of stability. The Arab Spring has not spared Iraq and its citizens have been out on the streets demanding key reforms and access to basic infrastructure and jobs – but the protests have not threatened the government just yet.
The country, which is recovering from the United States-led invasion apart from multiple wars during the eighties and nineties, remains vulnerable to the problems affecting other countries in the region. There is a danger of Iraq getting swept up in the events taking place in Syria and the Gulf-Iran rivalry which has threatened to escalate.
Iraq, which has a majority Shii’te population, has been watching with some consternation the treatment meted out to Bahraini Shii’te, and while we don’t expect the Iraqi government to intervene, its citizens have protested vehemently against Saudi and Bahraini governments.
Iraq has no shortage of domestic concerns either. Nine months after an election that saw a divided electorate, a new government was finally formed last December led by Prime Minister Nouri Al-Maliki.
DRIVEN BY OIL
The base of Iraq’s development centres around its oil industry. Although analysts think that Iraq has barely scratched the surface of its oil reserves, the country is already the world’s 12th largest producer of crude. The country sits on the fourth largest reserves in the world, according to the U.S. Department of Energy, with 115 billion barrels of oil reserves.
“Just a fraction of Iraq’s known fields are in development, and Iraq may be one of the few places left where vast reserves, proven and unknown, have barely been exploited,” says the U.S. Department of Energy.
Much of Iraq’s economic growth ihas come coming from its oil production, which has benefited from high oil prices.
“Growth in non-oil real GDP will depend on improvements in the security situation,” says the IIF. “If oil prices remain above $100 per barrel, and if the production of crude oil continues to increase over the coming years to about 4.5 mbd by 2015, then official foreign exchange reserves could almost triple, rising from $50 billion at end- 2010 to $143 billion by 2015, equivalent to 78% of projected GDP, or 15 months of import cover.”
Iraq has stepped up its oil production in the first quarter of this year to an average of 2.70 million barrels per day (mbd), as compared with 2.36 mbd in 2010. Assuming consumption of oil increases by 5% a year, exports of crude oil in 2011 are projected at 2.15 mbd.
The increase was to cover Libya’s shortfall and also aided by three successful bidding rounds held since 2008, which drew in international oil companies to develop and/or rehabilitate Iraq’s vast oil fields. The government has set ambitious plans to increase oil output to 11 mbd by 2020.
But observers don’t expect the government to meet that target. The IIF expects a production level of 4.5-million barrels per day by 2015, and the International Monetary Fund at 5 million by 2017.
“The main risks in the coming years will be bottlenecks in the export infrastructure that will need to be addressed. The authorities are working to upgrade and expand the country’s oil infrastructure,” says the IMF.
Additional single point moorings are planned at the Basra oil terminal, as well as additional pipelines to the terminal, which is Iraq’s largest point of export. Plans also include the construction of new domestic pipelines to connect the southern fields to the northern pipeline to Turkey, and a new pipeline to Syria.
In addition, large investments in supporting activities are also underway and planned, including the construction of desalination plants to produce water for injection in the fields, and storage facilities. These investments will require time to implement, and suggest a more gradual increase in Iraq’s oil production. Based on more conservative assumptions for the time it will take to expand Iraq’s export capacity, oil production could still increase to over 5 mbpd by 2017.
$37-BILLION PLAN
Like many countries in the Middle East, Iraq has a young population with 57% of its 31.5 million between the ages of 15-64 and 41% of the population under 14. Unemployment stands at 17.5%, according to World Bank report, and job creation is crucial.
On April 25, the Iraqi cabinet approved $37-billion development programme to improve its dilapidating infrastructure. Some of the key points of the programme includes development in key areas such as:
Transport infrastructure $10-billion
Highways $1.5-billion
Education $5-billion
Higher Education $2-billion
Water & Sewage $5-billion
Agriculture $5-billion
Health Infrastructure $3-billion
The development, which was first proposed during Prime Minister Nour Al- Maliki’s first term, will at least partially be funded by the government’s oil revenues. The IMF’s stand-by agreement (SBA) of $3.7-billion program will also be used as part of the ongoing reconstruction of the country.
The plan is in addition to the 2011 budget, based on a conservative oil price of $76.50, which aims to accelerate investment in public services and in oil infrastructure, as well as to accommodate additional social safety net and security outlays, while remaining consistent with medium-term fiscal sustainability and available financing.
“Iraq’s rehabilitation needs remain large, particularly to improve public service delivery and rebuild essential infrastructure, which are critical also to help create a private sector that can provide sufficient employment opportunities to the country’s large labour force,” says the IMF.
The budget deficit is projected to narrow substantially in 2012 and to move back into surplus in the following years. Over the medium-term, and even with more cautious assumptions regarding the increase in oil production than those presented in the oil companies’ production plans, Iraq’s government finances would reach a sustainable position.
The Central bank of Iraq has been successful in keeping inflation under control, by managing the exchange rate and by keeping the policy interest rate positive in real terms. Headline inflation and core inflation (excluding fuel and transportation) have remained in the low single digits. The CBI’s policy interest rate, which has been gradually reduced, is currently at 6% and positive in real terms. With low inflation, the exchange rate has been stable since the beginning of 2009.
The bank is also reportedly planning to remove three zeroes from the Iraqi dinnar in a bid to further stablize the currency and improve the government’s purchasing power.
CONCLUSION
For all its problems – and Iraq has many – under Prime Minister Nour Al Maliki, the country is slowly moving towards stability and economic recovery. Given that foreign investment remains a major driver of growth for the country, the country’s security risks are high and has already delayed projects and development plans. However, the restive population with its various factions and sectarian and political divides are looking to the government for faster growth and more economic reforms to accelerate growth. Al Maliki’s success will depend on how quickly the $37-billion plan is executed and whether the increased oil revenues trickled down to Iraqis on the street.
http://wp.me/pZC7o-7Z1
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Boardroom Coup at DNO Fuels Bid Speculation
Posted on 13 June 2011. Tags: DNO, Norway, RAK
Boardroom Coup at DNO Fuels Bid Speculation
Norwegian investor Berge Gerdt Larsen was booted out as chairman of DNO International on Thursday, in a boardroom coup led by majority shareholder RAK Petroleum.
RAK chief executive, Bijan Mossavar-Rahmani (pictured), was voted in as new chairman at the Norwegian independent’s annual general meeting in Oslo, after the Middle East shareholder disclosed its plan to replace part of the DNO board just half-an-hour before the meeting.
United Arab Emirates-based oil and gas producer RAK increased its stake in DNO to 30% in April last year and the latest move by Mossavar-Rahmani suggests he may be positioning his company for a possible takeover of DNO, which mainly operates in Kurdistan and Yemen.
Mossavar-Rahmani is reported to have told Bloomberg News today that a merger of the two companies is a possibility.
“DNO International has a solid foundation in assets and importantly, in people. We believed this as we acquired our large position in the company and we believe it today as we take a more active role, in collaboration with shareholders, directors and management, to stabilise DNO International and then drive it to realise its full potential,” he said in a statement issued after the AGM.
However, in an implied criticism of his ousted predecessor, he emphasized the need to bring best practices to the company in terms of governance, transparency, accountability, cost control and regulatory compliance, while improving its relationships with host governments.
At today’s AGM, shareholders voted 78.18% in favour of the new board with Mossavar-Rahmani at the helm, with 21.82% against, TDN Finans reported. However, Gerdt Larsen complained that 61% of shareholders were not represented at the meeting.
As well as the RAK boss, the board now comprises deputy chairman Gunnar Hirsti and directors Marit Instanes and Shelley Watson, who were all re-elected, with Karen Sund, head of Oslo-based consultancy Sund Energy, elected as the only new independent director.
First Securities analyst Teodor Sveen Nilsen told Reuters that the boardroom switch did not alter his view of DNO’s prospects.
“It’s not unnatural that the largest owner, RAK, has the board chairmanship, but this could revive speculation about a RAK offer to buy DNO.”
At last year’s annual meeting DNO shareholders elected two board members proposed by RAK, including RAK board member and former U.S. ambassador to Iraq Zalmay Khalilzad, who subsequently declined to serve.
Three months ago Mossavar-Rahmini took the seat that had been designated for Khalilzad.
(Sources: UpstreamOnline, Reuters)
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Kurdish oil boom begins
Larry Morrow, a construction supervisor for Norway's DNO Iraq, taking a call about work at the Tawke field as he overlooks the crude processing facility at DNO's Feyshkabour export center. On the far right is where Tawke field oil is piped in. To the left, pipelines running from a tanker offloading center where other KRG fields truck their crude to be exported. (BEN LANDO/Iraq Oil Report)
Larry Morrow, a construction supervisor for Norway's DNO Iraq, taking a call about work at the Tawke field as he overlooks the crude processing facility at DNO's Feyshkabour export center. On the far right is where Tawke field oil is piped in. To the left, pipelines running from a tanker offloading center where other KRG fields truck their crude to be exported. (BEN LANDO/Iraq Oil Report)
By Ben Lando of Iraq Oil Report
Published June 13, 2011
Three years ago, the only thing shining in this Kurdish village was the reflection off the seepage pools of crude bubbling in residents' backyards. Now the summer sun glares off the tinted windows of new houses painted in bright pastel colors. The region is experiencing what appears to be the beginning of its long-heralded oil boom.
In the past four months, oil exports from five fields within or administered by the semi-autonomous Kurdish region have gone from zero to around 181,000 barrels p...
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http://forum.hegnar.no/thread.asp?id=2031096
Tilbake til: Olje og energi
Innlegg av: California (29.06.11 08:48 ), lest 0 ganger
DNO: THE KURDISH OIL BOOM BEGINS
Economy - Kurdish oil boom begins 29-Jun-11 [8:19]
PNA-Three years ago, the only thing shining in this Kurdish village was the reflection off the seepage pools of crude bubbling in residents' backyards. Now the summer sun glares off the tinted windows of new houses painted in bright pastel colors. The region is experiencing what appears to be the beginning of its long-heralded oil boom
In the past four months, oil exports from five fields within or administered by the semi-autonomous Kurdish region have gone from zero to around 181,000 barrels per day (bpd), and companies have received a share of the $243 million payout from Baghdad.
The Kurdistan Regional Government (KRG) now accounts for more than eight percent of the country's oil exports and more than a third of the flow through the Turkey pipeline. The Tawke field, developed by Norwegian firm DNO, accounts for 72,000 bpd of exports. And on Thursday, Gulf Keystone Petroleum's Shaikan field began its first exports, of 5,000 bpd.
Facilities are expanding at the fields and a key DNO-run export hub near the borders with Turkey and Syria. There is a hope locally to reach 200,000 bpd of exports by year's end.
"When the KRG told us we would resume exports, they were already very optimistic," said Eric Aillaud, production manager for DNO Iraq. His company just received its first payment for its work in Kurdistan: $103.7 million. Tawke's maximum capacity is currently 75,000 bpd, Aillaud said, but if the pumps were upgraded or the field's tanker loading site were utilized, "then you can expand."
Innlegg av: California (29.06.11 08:49 ), lest 0 ganger
RE^1: DNO: THE KURDISH OIL BOOM BEGINS
The KRG's oil development has faced huge political obstacles, many of which still remain. Leaders in Baghdad and the KRG capital of Erbil fundamentally disagree about the appropriate distribution of power between the regional and central governments; as a result, the Kurds have signed oil deals despite the central government's objections, and the Oil Ministry has considered those contracts illegitimate and has blacklisted the companies who signed them. For many years, the dispute prevented Kurdish oil from being exported.
Yet leaders in Erbil and Baghdad have recently found urgent reasons to resolve their conflicts, at least in the short term: the high price of oil and the demands of Iraq's budget have provided financial incentive, and Maliki has needed the support of the sizable Kurdish parliamentary bloc to win another term and keep his governing coalition together.
The two sides initiated a rapprochement in January, when the central and regional leadership reached a still-secret but somewhat loosely guarded agreement to re-start the flow of exports. Unlike a short-lived export deal in 2009, which didn't include any mechanism for paying the contractors, the central government has agreed to reimburse the contractors for their costs, among other commitments by both sides.
According to various accounts of the deal, payments are to be made every other month, equivalent to the value of half of the KRG crude exported, followed by professional auditing of true costs that are being recovered. Baghdad transferred the first of those payments to the KRG in late May.
A top official at the Taq Taq Operating Company - the joint venture between Turkey's Genel Energji and China's Sinopec (having purchased original investor, Swiss-based Addax Petroleum, and then being subsequently blacklisted from proposed deals in Baghdad) - confirmed it received a $92.7 million payout. Officials from other exporting firms confirmed payments as well.
Forty oil companies have entered Iraq via Kurdistan. The most prominent of those, the American firm Marathon signed onto four blocks last year. Sources say some of the largest oil companies in the world that haven't scored a deal from Baghdad are knocking on doors up north.
In one telling portent of the boom times ahead, the Oil Ministry's own Iraqi Drilling Company recently opened an office in Erbil, in order to pursue sub-contracts in Kurdish fields: even the central government's state-run oil services arm is joining the Kurdish oil bonanza.
Short-term solutions spur rapid expansion
Oil from Tawke is sent through DNO's 45-kilometer pipeline to its export processing facility at Feyshkhabour, under the watch of Syrian mountains three kilometers to the west and Turkish mountains two kilometers north. The Tawke pipeline comes above ground near a loading bay that looks like a massive petrol station, where trucks carrying crude from other fields empty their tanks. The blend of piped and trucked Kurdish oil then flows into another pipeline running under a beat-up road and over to the Iraqi Oil Ministry's metering station, which feeds the export pipeline to the Mediterranean port of Ceyhan, Turkey.
The Feyshkhabour facility is steadily expanding. It can handle about 112,000 bpd now and will likely reach 150,000 bpd capacity by the end of the year. Sources say its design capacity is more than twice that, and can be achieved with some minor electrical tweaking of the pumps and more crude. An additional pipeline is being considered, which, according to plans, nearly every field KRG field being developed would feed into.
Such expansion has been a long time in the making. DNO in 2004 was among the first companies to sign a contract with the Iraqi Kurdish leaders, who officially organized into the KRG in 2006. The region's oil ambitions date back even further. In 2002 and early 2003, with the end of the Saddam Hussein regime on the horizon and under the protection of an international no-fly zone, Kurdish authorities signed with two Turkish companies, Genel Enerji and PetOil.
Taq Taq is currently trucking 20,000 bpd to Feyshkhabour and is expected to increase to 30,000 bpd soon. Gulf Keystone plans to ramp up to 20,000 bpd by early next year, according to the company's country manager, Adnan Samarrai.
Iraq has 143.1 billion barrels of proven reserves of oil, and if the KRG's estimated 30 to 40 billion can be authenticated, Iraq would become the second-largest holder of oil reserves in the world. Iraq is about to launch an exploration auction that will likely boost reserves further toward closing the gap with world-leader Saudi Arabia, which claims 267 billion barrels.
Between the KRG's deals and the massive output contracts Baghdad has signed with foreign oil companies, the stated plans are to increase production capacity to more than 13.5 million bpd. The KRG has said it could contribute one million bpd within four years.
The growing exports and initial payments represent a tenuous breakthrough in a dispute that has plagued the politics, economy and security of the country. Federal revenues from the KRG's oil could create a mutual economic dependence that leads to clarifying Iraq's national oil policy and aligning the country's two oil sectors.
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INTERVIEW-Iraq can barely handle oil security in south
29 Jun 2011 14:12
Source: reuters // Reuters
* Expansion will put new stress on undermanned oil police
* Sophisticated cameras and monitoring systems needed
* Force needs helicopters to monitor sprawling pipe network
By Ahmed Rasheed
BASRA, Iraq, June 29 (Reuters) - Iraq is barely capable of protecting its vital oil infrastructure and could falter if its oil police do not get enough manpower and sophisticated security equipment soon, a senior Iraqi security official said.
Brigadier Moussa Abdul-Hassan, chief of the south oil police, said the expansion by foreign oil companies of operations in southern oilfields could surpass the ability of the oil police to offer protection in the future.
"With the expansion of oil work in the south, from drilling hundreds of oil wells to building oil facilities, we need to boost the number of troops and update our equipment to be fit for the job," Hassan told Reuters in an interview.
"Now we are barely controlling the situation, but for the near future, I mean next year, we will have new oilfields starting massive work, especially in Majnoon and West Qurna 1 and 2, and that expansion will definitely increase our responsibilities," Hassan said.
Emerging threats against oil infrastructure represent a challenge to Iraq prepares to take full control of security ahead of a complete withdrawal of U.S. troops by year-end.
The protection of Iraq's oil reserves, among the world's largest, is crucial to rebuilding after years of war and economic sanctions as it pursues plans to become a top producer once again.
Militants have targeted Iraq's oil resources this year.
At the Doura refinery south of Baghdad, which has a capacity of 240,000 barrels per day, troops defused four make-shift bombs earlier this month.
In February, al Qaeda militants attacked Iraq's largest refinery in Baiji, killing four workers and detonating bombs and triggering a fire that shut down the operations for two days. Security forces foiled another attack days later.
In early June, bombs were planted atop four crude depots of the Zubair 1 storage facility in the south, setting ablaze one tank.
OLD METHODS
"Having sophisticated security cameras and monitoring systems, this breach could have been avoided," Hassan said in the oil hub city of Basra. "We are still using old methods of protection."
"For the future , we are seeking to boost oil police numbers to cope with building up oil work in southern fields, so we need more trained policemen, sophisticated equipment. Now the equipment we're using does not meet global standards," he said.
Hassan did not cite numbers. Major General Hamid Ibrahim, head of the oil police, told Reuters in March that the 40,000-member force needed to add 12,000 more officers.
Hassan said the police need thermal cameras and bomb detectors installed around fields, installations and pipelines. Iraq has about 7,000 km (4,300 miles) of oil and gas pipelines.
"We are also lacking helicopters, which have maximum importance in securing our sprawling oil pipelines and export facilities," Hassan added.
Asked if the police had received any recent tips that armed groups might target oil facilities in Basra, Hassan said: "We are not waiting for security tips to respond. We consider Basra oil facilities under a constant threat and primary target for saboteurs."
Hassan said the complete withdrawal of U.S. forces by Dec. 31 would have no impact on the work of the oil police, who operate independently.
"The work we do is not dependent on coalition troops and we are currently coordinating with the Iraqi army in securing oil facilities in the south," he said.
Hassan said the force had successfully compromised smuggling operations in Basra, a constant challenge.
"Smugglers were making holes in the export pipelines, installing valves with small pumping motors to steal the crude," he said. "We decided to use tough measures by burning the trucks we seized and it worked in deterring them."
(Reporting by Ahmed Rasheed; Editing by Jim Loney)
===
RAK Sizes Up DNO for Possible Takeover Bid
Hilsen Energy Intelligence Finance:
Energy Intelligence Group
Wednesday, June, 29, 2011
Despite mixed success building up its oil and gas portfolio since being established six years ago, RAK
Petroleum of the United Arab Emirates has put itself in a position where it could potentially acquire
Norway’s DNO if it makes the decision to do so. After increasing its ownership stake to 30% last year,
RAK took control of DNO’s board of directors earlier this month, sending renewed speculation through the
market it may seek to take over the company, whose main producing asset is in the Kurdistan region of
northern Iraq.
RAK started buying substantial DNO shares two years ago, gradually hiking its stake to 30% by May
2010, where it remains today. RAK Chief Executive Bijan Mossavar-Rahmani is key to the company's
current growth strategy. With RAK since 2008, Mossavar-Rahmani was founder of Houston-based
Apache International and became CEO of RAK in May of last year. Elected to DNO’s board in March, he
became chairman following its annual general meeting on Jun. 9.
Ousted from DNO's board was Berge Gerdt Larsen, chairman since 2002 and CEO from 1996 to 2002.
To some, including Larsen, RAK’s decision to change the board came as a surprise. The Norwegian
press described the move as a new strongman coming to power in the form of a boardroom coup.
Mossavar-Rahmani, an Iranian-American, has emphasized the move was not a surprise attack but merely
a 30% shareholder taking a larger role and more control at a critical time for both companies. RAK now
views itself in a better position to take effective control over management and be a more outspoken
shareholder and proactive investor, analysts say.
As chairman of both RAK and DNO, Mossavar-Rahmani has indicated that DNO is in the process of
rebalancing its portfolio, suggesting it is actively seeking to refocus efforts where the company has a
comparative advantage, such as in the Middle East and North Africa region and in Norway itself.
Recognizing it cannot be everywhere, DNO could make a strategic exit from its exploration block in
Mozambique and its development block in Equatorial Guinea, industry sources say. Founded in 1971,
DNO also holds producing assets in Yemen and a stake in an exploration block in the North Sea.
Established in 2005 with more than $800 million of up-front capital, RAK operates under the patronage of
Sheikh Saud bin Saqr al-Qasimi, ruler of Ras al-Khaimah, the UAE’s northernmost emirate. With
ambitions to become a regional exploration and production player, RAK also seeks to maximize returns to
its key shareholders -- the ruling family and investors from the UAE and Saudi Arabia. RAK is still
relatively new and largely untested on a wide regional scale -- with operations limited to Oman, Tunisia
and the UAE -- but its state connections help open up doors in the region, while operating like a private
company eases some of the burdens inherent in state bureaucracy.
RAK’s primary attraction to DNO is the latter's position in Iraqi Kurdistan, where its Tawke field holds an
estimated 500 million barrels and currently produces around 70,000 barrels per day. By linking up with an
already established player in Kurdistan, RAK could take a shortcut to holding sizable producing assets in
a previously underexploited frontier, avoiding risky and hard-to-replicate initial stages that DNO has
already passed through, according to sources familiar with RAK's thinking.
Despite being an early entrant into Kurdistan in 2004, DNO has struggled to monetize its efforts within a
highly complex Iraqi political environment. DNO recently received a first payment of $103.7 million to
cover its share of Kurdish exports that restarted in February, but uncertainty still exists over a permanent
payment mechanism and the legality of contracts signed with the Kurdistan regional government.
DNO reported a loss of NOK 65.4 million ($11.9 million) for the first quarter of 2011. After taking into
account its 30% share of DNO’s quarterly loss, RAK reported net profits of AED 5.9 million ($1.6 million),
down from AED 30.5 million during last year’s first quarter. RAK produced 9,250 b/d of liquids and 31.2
MMcf/d of gas in 2010, all from its offshore block in Oman.
Viewed as a long-term strategic investment, RAK is willing to accept short-term uncertainty in Kurdistan,
sources close to the company say. Evident of its efforts to leverage political and cultural ties to advance
its interests, last year RAK elected Zalmay Khalilzad, a former US ambassador to Iraq with many longstanding
connections in the region, to its board.
The biggest uncertainty regarding DNO and its valuation is the profit-sharing mechanism in Kurdistan,
says Irmantas Vaskela of Terra Markets, a Norwegian investment bank. “It may be that RAK would like to
see some more clarity regarding the profit sharing in Kurdistan before bidding for DNO,” Vaskela says.
Considering the substantial drop in DNO’s share price since early February, it may be more attractive for
a takeover bid -- and the chances of that bid succeeding have increased after recent board changes,
analysts say.
RAK has said publicly it is considering buying DNO, with access to capital not an obstacle. In the event it
is unable to come up with the funds necessary to launch a cash bid, a merger of the two companies is a
potential scenario with RAK likely able to dictate the terms to some degree. With its sizable stake and
control of the board, RAK also has the option of remaining heavily involved in DNO’s affairs without
triggering a takeover bid, which would occur if its stake reached 33.3%.
===
Latest snipit from IHS dated 28th of June appologies if alerady posted.
OpsGeo
Crude exports from Iraqi Kurdistan are coming in at a level of 175,000 b/d, according to Michael Howard, adviser to Ashti Hawrami, the natural resources minister of the Kurdistan Regional Government (KRG). The numbers demonstrate that Iraqi Kurdistan is well on track to hit its year-end target to export 200,000 b/d, he told Dow Jones, putting the total crude production in the autonomous region at between 225,000 b/d and 230,000 b/d. Howard also told the news agency that a second tranche payment from the Iraqi central government to the oil companies producing the crude in Iraqi Kurdistan was expected soon. Meanwhile, Norway's DNO, which produces the largest share of Iraqi Kurdistan's exports at its Tawke field, flagged its June output in the region as being a bit lower than May's output, given operational disturbances on the central government-controlled Kirkuk-Ceyhan export pipeline to the Turkish Mediterranean coast.
DNO's gross crude production from Tawke came in at 70,263 b/d in May, up from 65,333 b/d in April, but is likely to fall back to "around 65,000 b/d" in June, as the Kirkuk-Ceyhan export pipeline has suffered some shut-ins this month. Significance: Iraqi Kurdistan is able to deliver crude export growth at a time when Iraq proper is also seeing a large increase in crude exports from its IOC-developed southern megafields, but also faces very large cost recovery claims from the companies, which the government seems to have expected would come in at a later date. THE ADDED VOLUMES FROM THE NORTH ARE THEREFORE MAKING A CRUCIAL DIFFERENCE TO THE STATE COFFERS AND ARE QUITE LIKELY TO SMOOTH THE ACCEPTANCE OF A FINAL DEAL BETWEEN THE IRAQI GOVERNMENT AND THE KRG THAT WOULD RECOGNISE ON A NATIONAL LEVEL THE OIL CONTRACTS THE REGION HAS AWARDED UNDER ITS OWN OIL LAW, ALTHOUGH SOME FORM OF COMPROMISE ADJUSTMENT OF THE CONTRACT TERMS MIGHT ULTIMATELY STILL BE NECESSARY (see Iraq: 11 May 2011: and Iraq: 6 May 2011: ). Iraqi pipeline infrastructure will, however, for the foreseeable future add a significant degree of uncertainty to production and export numbers, given the low level of infrastructure integrity and the rising tendency among remaining militants to target strategic oil infrastructure of late (see Iraq: 17 June 2011: and Iraq: 6 June 2011:
====
Published: 08:35 CEST 04-07-2011 /Thomson Reuters /Source: DNO International ASA /XOSL: DNO /ISIN: NO0003921009
http://bit.ly/kgmbro
Proposed merger of RAK Petroleum MENA subsidiaries into DNO ahead of London listing
DNO International ASA (DNO) and UAE-based RAK Petroleum Public Company Limited (RAK Petroleum) have signed a heads of agreement to merge RAK Petroleum's Middle East and North Africa (MENA) operating subsidiaries into a subsidiary of DNO in exchange for DNO shares to be issued to RAK Petroleum.
The consideration shares will be issued at a minimum share price of NOK 8.25 per share and a maximum share price of NOK 10.00 against a value of the RAK Petroleum MENA assets between USD 250 and 300 million.
See attached full stock exchange notice for more information.
Oslo, 4 July 2011
DNO International ASA
Corporate Communications
This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)
Proposed merger - SE Notice
===
Parliament pressing for oil deal ban
By Ben Lando of Iraq Oil Report
Published July 4, 2011
BAGHDAD - Parliament's Oil and Energy Committee wants the legislature to ban Iraq's central, regional, and provincial governments from signing any new oil or gas contracts until a long-delayed hydrocarbons law is passed.
The committee formally submitted a statement to Parliament, a copy of which was given to Iraq Oil Report by committee adviser Luay al-Khateeb of the Iraq Energy Institute, calling for a vote banning any new deals until the law is passed.
"We will go back to parliament (after July 12) and go for a vote on stopping new signatures and to speed up the oil and gas law," said Adnan Janabi, the chairman of the Parliament committee. "We will get the support by parliament on both counts."
"I want to put an end to this vicious circle," "Today I got a communication (about changes) from the committee from the minister of oil and we'll study it," Janabi said Sunday. "But we won't wait for too long (for a new law to be submitted)."
"At the moment there are doubts and disputes raised by various people," said Janabi. "We have legal opinions which say the contracts signed by the Ministry of Oil have some problems, constitutional and legal problems. And the Ministry of Oil says that the contracts signed by the Kurdistan Regional Government are illegal. We want to end that. The way to end that is to press everybody and to get our act together and enact the oil and gas law."
"It will be the law which will enable every party, including the (foreign) companies, to be comfortable with their future," Janabi said.
The new oil and gas law would delineate authority over Iraq's oil sector. The 2005 Constitution calls for such legislation but has been caught in the unresolved debates over the extent of local versus federal power and the role of foreign oil companies.
Political leaders agreed to a draft law in February 2007, but the deal fell apart, and the oil sector has since been politicized and within a legal environment filled with contradictory laws and competing interpretations.
The energy committee's move is an attempt to put pressure on the feuding politicians, all of whom recognize the central importance of oil to Iraq – the government generates more than 90 percent of its revenue from oil – but cannot agree on how best to guide the development of the sector.
The central government has signed 12 oil deals and two gas deals, reached a draft agreement on a third gas deal and has planned for January a fourth oil and gas auction, this time for exploration blocks. Iraq's rich geology has attracted the world's largest oil companies.
The Kurdistan Regional Government has signed nearly 40 deals since the oil law failed in 2007, and is courting additional investors for available development deals.
Provincial governments have also attempted to strike deals on their own – though with little success – including most recently in Salahaddin province.
All sides say their deals are legal, pointing to both their own favored interpretations of the Constitution and older laws still on the books to back their dealings and rule the others illegitimate.
Combined, the deals signed would at least on paper increase Iraq's oil production capacity from about 2.7 million barrels per day (bpd) now to more than 13.5 million bpd in seven years. But they have been signed under varying degrees of controversy; Janabi insists that existing laws, which have been approved only by the Cabinet, also require Parliament's validation in order to be legal.
The committee's ban, if passed by the legislature, would potentially hamper several oil sector developments, including the planned fourth bidding round, a draft joint venture with Royal Dutch Shell and Mitsubishi to capture an estimated 700 million cubic feet of associated gas being flared in Basra province, and any prospective KRG contracts. Under the terms of the proposed measure, such deals could only proceed once Parliament passes a new oil and gas law.
Currently the committee has a draft of the oil and gas law which was submitted by the Cabinet to Parliament in the previous term. But it is waiting for a new proposal from the Cabinet's energy committee, which is led by Deputy Prime Minister for Energy Affairs Hussain al-Shahristani – who was Oil Minister from mid-2006 until late 2010. The Cabinet energy committee began debating changes to the draft law at a meeting last week.
==
INVITATION TO SECOND QUARTER 2011 PRESENTATION
DNO International ASA will release its results for the second quarter 2011 to the Oslo Stock Exchange on 17 August 2011 at 7:30 A.M. CET.
On the release day, representatives from DNO International ASA will give a presentation of the quarterly financial statements. The presentation will be held at 08:00 A.M. at Oslo Konserthus, Munkedamsveien 14.
The presentation can also be followed live on the Internet, via a video webcast at www.dno.no. An archived version of the webcast will be posted on www.dno.no shortly after the presentation. The presentation will be held in English.
Oslo, 16 August 2011
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