DNO shuts KRG crude fields after export halt: Update

Adds Genel status in paragraph 7

Norway-based DNO said today it was shutting down its oil fields in Iraq's semi-autonomous Kurdistan region, four days after Turkey halted crude exports through the pipeline that runs to the port of Ceyhan.

DNO was instructed by the Kurdistan Regional Government (KRG) to "temporarily cease" the Ceyhan-bound deliveries following an arbitration ruling in favour of Iraq in a case that challenged Turkey for exporting Kurdish crude without Baghdad's consent.

Following the pipeline shut-in, DNO started diverting crude into storage tanks on 25 March, where it said it could accommodate "several days" of production from its Tawke and Peshkabir fields. But with storage nearing capacity it halted production at Peshkabir and plans to conduct deferred maintenance there. The production shutdown at the Tawke field has also started.

Output at Tawke and Peshkabir was around a combined 107,000 b/d in 2022, DNO said, representing a quarter of Iraqi Kurdistan's total exports.

"It is unfortunate it has come to this given the likely impact of a continuing supply disruption on oil prices and at a fragile time in global financial markets," said DNO's chairman Bijan Mossavar-Rahmani. Front-month Ice Brent crude futures have risen by around $4/bl since the pipeline was shut.

Canadian-based Forza was the first foreign operator to announce a field shutdown after running out of storage capacity. Another operator of KRG-based oil fields, HKN Energy, said that its storage facilities were approaching capacity and that it would shut down production within a week unless the Kirkuk-Ceyhan pipeline resumes operations.

UK-listed Genel Energy, which partners DNO at Tawke and Peshkabir, said output at its 4,500 b/d Taq Taq field is still going into storage and it has capacity to continue this for around three weeks. At the 4,700 b/d Sarta field there is storage capacity for "several days," it said.

Crude exports from northern Iraq, Kirkuk Blend, averaged 452,000 b/d last year, according to Argus tracking. More than 380,000 b/d of this was marketed by the KRG. Iraq's federal oil marketing firm Somo accounted for the rest, all of which all went to Turkish refiner Tupras. A source has said the dispute will only be resolved if Erbil hands over to Somo the rights to market its share of crude exports.

By Rithika Krishna and Ben Winkley