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Major Oil Producer In Kurdistan Shuts Down Fields After Export Halt

The company pumping a quarter of Kurdistan’s crude oil exports, Norway-based DNO ASA, said on Wednesday it had started an orderly shutdown of its oil fields in the semi-autonomous region of Iraq, following the suspension of oil exports from Kurdistan via the Turkish port of Ceyhan.

Kurdistan’s crude oil exports – around 400,000 bpd shipped through an Iraqi-Turkey pipeline to Ceyhan and then on tankers to the international markets – were halted late last week by the federal government of Iraq.

Last week, the International Chamber of Commerce ruled in favor of Iraq against Turkey in a dispute over crude flows from Kurdistan. Iraq had argued that Turkey shouldn’t allow Kurdish oil exports via the Iraq-Turkey pipeline and Ceyhan without approval from the federal government of Iraq.

Exports have been shut in after the court ruling until the situation is resolved, which has resulted in companies operating in Kurdistan to start field shutdowns. Before the shutdown, the Iraq-Turkey Pipeline carried some 400,000 bpd of Kurdish oil and another 70,000 bpd of Iraqi oil for export from Ceyhan.  

For four days after the suspension of exports, DNO had diverted oil production to storage tanks, but capacity is limited, as previously announced, the company said in a statement today.

The DNO-operated Tawke and Peshkabir fields averaged combined production of 107,000 barrels of oil per day in 2022, accounting for a quarter of Kurdistan’s total exports. Peshkabir production was halted on Tuesday 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 kilometers (6.2 miles).

“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,” DNO’s Executive Chairman Bijan Mossavar-Rahmani said.

Another operator in Kurdistan, London-listed Gulf Keystone Petroleum, said on Monday that its facilities “have storage capacity that allow continued production at a curtailed rate over the coming days after which the Company will suspend production.”  

By Tsvetana Paraskova for Oilprice.com

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