December 3, 2012 4:47 pm

Oil groups receive Kurdistan payments

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Two companies that produce oil in Iraqi Kurdistan, Genel Energy and DNO International, said they had received long-delayed payments for oil exports from their Kurdish fields, ending a long wait that had unnerved investors.

But DNO’s share price fell in trading in Oslo, reflecting disappointment at the size of the payment.

DNO, based in Norway, and Genel, which is run by the former head of BP Tony Hayward, have been the casualties of a dispute between the Iraqi central authorities in Baghdad and the Kurdistan Regional Government over oil and land rights in the autonomous region.

Baghdad has refused to recognise the contracts the KRG has signed with a number of foreign oil companies. The dispute has meant that for long periods, DNO and Genel were not been paid for the oil they exported out of Kurdistan, which is sent through a pipeline controlled by Baghdad.

The KRG suspended exports in April to protest the payment delays, forcing the companies to sell their oil on the local market at lower prices than it would have fetched internationally.

The government partially resumed export flows in August as a goodwill gesture and the following month it reached a settlement with Baghdad which unlocked the frozen oil revenues.

A first tranche was duly disbursed, and on Monday the companies finally received their money. DNO said it had received $160m for past oil exports from the Tawke field in 2009, 2011 and 2012, bringing the total it has received from Baghdad to $280m.

But some were disappointed at the size of DNO’s payment. “The word on the street was that they might get $200m, but it was based on guesstimates because no-one knew how the money would be split among the companies,” said Thomas Aarrestad, an analyst at Pareto Securities.

Genel said it had received $132m, which it said would be recognised in the fourth quarter of 2012. The money is for its share of historic export revenues from the two producing fields in which it has interests – Taq Taq and Tawke.

A second tranche of about $300m is expected to be disbursed by the Iraqi government next year.

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