Oil: DNO forced to stop production in Iraqi Kurdistan

DNO announced on Wednesday that it had been forced to shut down its fields in the region because of the export freeze imposed by Turkey. This situation is likely to disrupt global financial markets and impact oil prices.

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The Norwegian oil company DNO, one of the main oil producers in Iraqi Kurdistan, announced on Wednesday that it had been forced to stop its fields in the region because of the export freeze imposed by Turkey.

DNO “has begun a planned shutdown of its oil fields in the Kurdistan region of Iraq,” it said in a statement. This interruption is the direct consequence of the halt since Saturday of deliveries via the Iraq-Turkey pipeline, itself due to a decision of an international court in favor of the federal government in Baghdad.

The oil issue has poisoned relations between the authorities in Baghdad, those in Iraqi Kurdistan and Turkey for many years. In 2014, Baghdad had filed a lawsuit against its Turkish neighbor following Ankara’s announcement to import oil from this autonomous region in northern Iraq to the Ceyhan terminal in the Mediterranean Sea in southern Turkey. The Iraqi government was strongly opposed to the Turkish decision, believing that it was the exclusive manager of this oil and the revenues derived from it. Ignoring Baghdad’s opposition, Erbil, the capital of the autonomous region, has begun exporting to Turkey.

Today, its total exports through Turkey amount to about 450,000 barrels per day (bpd). DNO accounts for a quarter of these exports, with the Tawke and Peshkabir fields producing an average of 107,000 bpd in 2022. The Norwegian company had initially diverted its production to storage facilities, but these are “limited”, it stresses. “It is unfortunate to be in this situation, due to the likely impact of a supply disruption on oil prices and at a time of fragility in global financial markets,” DNO Executive Chairman Bijan Mossavar-Rahmani was quoted in the statement as saying.

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