DNO International ASA, enlarged following its acquisition of RAK Petroleum PCL earlier this year (OGJ Online, Sept. 6, 2011), is streamlining its crude oil transportation operations in the Kurdistan region of Iraq.
DNO has redirected nearly one third of its crude oil production there to sales to the domestic market. The company said the move will improve predictability and stability of its revenue stream.
The company recently signed contracts with three buyers for delivery of 675,000 bbl of oil from Tawke field on the Tawke PSC and Bastora field on the Erbil PSC at $50-55/bbl. Deliveries into the contracts are averaging 10,000 b/d. Payments are received in advance of deliveries.
Bastora crude is trucked to the Tawke facilities. DNO declared Bastora and Benenan oil fields on the Erbil license to be commercial earlier this year and will file development plans by yearend (OGJ Online, July 12, 2011).
Helge Eide, DNO president and managing director, said, “We are very pleased to have been given the green light by the authorities to commence cash sales to the local market and at a price twice last year’s levels. At current rates, DNO’s local sales bring another $15 million in payments to the company on a monthly basis which allows our operations to be self funding across our portfolio.”
The company expects to continue its domestic sales, though future volumes and prices will be contingent on market conditions. Exports meanwhile have declined due to continuing technical glitches in the northern Iraq pipeline system and now average 25,000 b/d.
Meanwhile, DNO said the first test on the Summail-1 exploration well on the Dohuk license has been completed and the lowermost Triassic zone was found to be water bearing. This is the first of several tests to be undertaken in the well over the coming weeks.