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Iraq oil fields shutting down after court decision

29 March 2023

Oil fields in Iraqi Kurdistan are shutting down in the wake of the recent court decision by the International Chamber of Commerce’s (ICC’s) International Court of Arbitration that ruled in favour of Iraq against Turkey on the issue of importing Kurdish oil without Baghdad’s approval.

On 29 March, the Norwegian oil and gas operator DNO announced that it had started “an orderly shutdown” of its operated oil fields in the Kurdistan region of Iraq.

The announcement came four days after it was instructed to temporarily cease deliveries to the Iraq-Turkey pipeline destined for the Mediterranean port of Ceyhan.

In its statement, DNO said it had “diverted oil production to storage tanks, but capacity is limited”.

The Tawke and Peshkabir fields, operated by DNO, averaged a combined production of 107,000 barrels a day (b/d) of oil in 2022, representing a quarter of Kurdistan’s total exports.

The statement DNO issued on 29 March said: “Peshkabir production was halted last night and plans drawn up to conduct deferred maintenance.

“Tawke production shutdown has started, but will take an additional day or so given the much larger numbers of wells spread across some 10 kilometres.”

DNO’s executive chairman, Bijan Mossavar-Rahmani, said: “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.”

Before the shutdown, the Iraq-Turkey pipeline carried 400,000 b/d of Kurdish oil and another 70,000 b/d of Iraqi oil for export to the Mediterranean and other refineries.

The London-listed oil company Genel Energy has a 25 per cent working interest in the Tawke production sharing contract. It also issued a statement about the shutdown on 29 March.

Genel said that production from the Taq Taq field, in which it has a 44 per cent working interest, continues to flow into storage, where there is the capacity for “approximately three weeks” of production.

It also said there was storage capacity for production from the Sarta field, which it has a 30 per cent working interest in, for several days.

Genel’s share price has declined by just below 10 per cent over the past month, while DNO’s share price has dropped by just over 11 per cent.

https://image.digitalinsightresearch.in/uploads/NewsArticle/10715678/main10504420.jpg
Wil Crisp

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