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Norway’s DNO, operator of the Tawke oil field in Iraqi Kurdistan, hit record output of almost 160,000 b/d in recent days. But despite its huge investment in the flagship asset, the Oslo-listed firm is feeling the pinch from non-payment by the Kurdistan Regional Government (KRG) for pipeline exports, one of the reasons why a majority of foreign oil companies in the region are looking to scale down their operations, in what was once seen as the most promising exploration frontier in recent decades.
Yet DNO Chairman and CEO Bijan Mossavar-Rahmani insists the company is committed to the Kurdistan region, though he warned in presenting Q1 results on 6 May that there would be no further investments in additional development wells at Tawke, where a production target of 200,000 b/d has been attained, or further exploration drilling until payments are regularized. DNO reported a Q1 operating loss of $69.2mn and says it has cut its capex budget to $100mn for 2015, roughly a third of 2014’s figure. A third of the budget allocated for this year has been spent but DNO is targeting savings of $20mn by cutting costs starting middle of the year, Mr Mossavar-Rahmani said in presenting provisional first quarter results.
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