Norway’s DNO is set to receive $110m in its first oil export payment from the Kurdistan Regional Government (KRG) in northern Iraq.

The payment is part of the $243m paid by Iraq’s central government to the semi-autonomous KRG to pay international oil companies exporting from its oil and gas fields.

“DNO has now received confirmation from the KRG that cash advances will be made by the KRG to companies exporting oil from the Kurdistan Region in Iraq. An amount of $110m will be released to DNO by the KRG as payment against some of the amounts due in respect of the Tawke PSC [production sharing contract],” says managing director Helge Eide in an 11 May press release.

The company has exported about 50,000 barrels a day (b/d) from the region since the end of February through the Kirkuk pipeline to the port of Ceyhan on the Turkish coast of the Mediterranean Sea. The Tawke field has been producing for almost two years, but output has been restricted to domestic sales, while Baghdad blocked exports from the Kurdish region.

In a 5 May statement, KRG Prime Minister Barham Salih said the payment to the KRG for the Region’s contractors amounts to about 50 per cent of “net revenues derived from the export of over 5 million barrels of oil from the Kurdistan Region between the start of February 2011 and 27 March”. 

This payment, amounting to $243m, is part of an interim agreement on revenue allocation reached by the KRG with the federal Prime Minister Nouri al-Maliki. This allows for the resumption of oil exports from the Kurdistan Region, marketed by the federal government’s State Oil Marketing Organisation (Somo), with a percentage of revenues sent to the contractors to pay exploration and extraction costs (MEED 8:5:11).

Despite the payment, the Oil Ministry in Baghdad continues to declare the KRG’s numerous production sharing contracts with international oil companies as illegal.