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Norwegian oil major scraps Kurdistan output guidance  

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Total investment in the offshore gas field has reached $12 billion and is expected to hit $15 billion in three years

Norwegian oil company DNO has scrapped its guidance for output in Iraq’s Kurdistan region following a halt in exports since March that forced the company to shut production.

Turkey stopped pumping about 450,000 barrels per day (bpd) of Iraqi crude from a pipeline from the Fish-Khabur border area to its Ceyhan port on March 25 after Iraq won an arbitration case at the Paris-based International Chamber of Commerce.

Four days later, DNO announced a shutdown of oil production from its Tawke and Peshkabir fields, which produced 107,000 bpd gross in 2022.

“Until export restarts and regularity of payment for past and ongoing oil sales is established, DNO cannot provide any projection of full-year Kurdistan production,” the company said in a first-quarter results statement.

DNO told a call with analysts that the company would be ready to restart and ramp-up production at short notice, when exports resume.

“We are positioning ourselves to hit the ground running when the opportunity finally arises. That could be (in) a week or two,” DNO’s executive chairman Bijan Mossavar-Rahmani told a call with analysts.

“There are a number of considerations (in restarting the pipeline), and one of the important ones is presidential elections in Turkey on May 14 with a possible run off,” he added.

Baghdad and the Kurdistan Regional Government (KRG) have asked Turkey to restart oil export flows, KRG confirmed on Thursday. This request came after traders buying crude from the Kurdistan region signed contracts with Iraq’s state-owned crude marketer Somo, sources familiar with the matter said.

The KRG has agreed for Somo to market its crude oil.

Mossavar-Rahmani told analysts he expected Somo’s involvement to ensure higher prices for Kurdistan’s crude.

“Somo in its own sales historically has had greater realisations (of crude prices) than Kurdistan had due to legal and political risks,” he added.

DNO’s production in Kurdistan accounted for almost 80 percent of the company’s total net oil and gas output in the first quarter of 2023, which stood at 89,400 barrels of oil equivalent (boed). The rest came from the North Sea and West Africa.

DNO holds a 75 percent stake in the Tawke license, which also includes Peshkabir field, while its partner Genel Energy has 25 percent. Genel also suspended its 2023 production guidance on Thursday.