DNO Welcomes Reports of Agreement to Resume Kurdistan Oil Exports Through Iraq-Türkiye Pipeline

ERBIL (Kurdistan24) – In a significant endorsement of a landmark deal brokered between Erbil and Baghdad, Norwegian oil and gas operator DNO ASA on Tuesday announced that it welcomes the reports of an agreement to resume crude oil exports from the Kurdistan Region through the vital Iraq-Türkiye Pipeline (ITP). The statement from the region's largest international oil producer injects powerful momentum into the final stages of resolving a crippling, multi-billion-dollar stalemate that has paralyzed the northern Iraqi energy sector for more than two years.

As a formal announcement of the tripartite agreement between the Kurdistan Regional Government (KRG), the Iraqi federal government, and international oil companies (IOCs) is expected within hours, the positive reception from a key commercial stakeholder like DNO signals that a new chapter of economic cooperation and stability may finally be at hand for both the Kurdistan Region and federal Iraq.

The breakthrough, as reported exclusively by Kurdistan24, represents the culmination of painstaking negotiations to end an export suspension that began in March 2023. An informed source confirmed that the Federal Ministry of Oil and the KRG's Ministry of Natural Resources have exchanged official letters of consent, removing the final legal and technical barriers to restarting oil flows.

This decisive step followed a successful meeting in Erbil on Monday between KRG officials and a delegation from Iraq's federal North Oil Company, which had been granted full authority to finalize the resumption procedures. The agreement is poised to bring an initial 230,000 barrels per day (bpd) back to the international market via the Turkish port of Ceyhan, providing a desperately needed infusion of revenue and marking a hard-won consensus after years of political and economic friction.

In its statement from Oslo, DNO confirmed it has "consistently stated that it is eager to resume exports," a position that aligns with the widespread relief accompanying news of the deal. However, the company also meticulously outlined the framework required for its full participation, conditioning its return to pipeline exports on the establishment of a secure and reliable payment mechanism.

The statement clarified that any resumption must be "pursuant to agreements that ensure payment surety for both past arrears and future exports based on the legal, economic and commercial terms of the production sharing contracts the Company holds with Kurdistan."

This conditionality brings to the forefront the complex financial legacy of the protracted dispute. While DNO’s public statement welcomed the political breakthrough, it also underscored the unique and substantial financial risk the company carries.

DNO Executive Chairman Bijan Mossavar-Rahmani drew a clear distinction between his company's position and that of other operators. “DNO’s exposure is different than that of other international oil companies,” he stated. The primary reason, he explained, is the sheer scale of the company’s investment and production, which translates into a much larger financial liability.

“Importantly, as the largest producer, the arrears owed to us by the KRG dwarf those of many of the others,” he said, “which also means that our exposure to future payment risk is also substantially higher than any other company.”

According to a source familiar with the negotiations who spoke to Reuters, DNO is seeking a resolution on the repayment of nearly $300 million owed by the KRG for crude deliveries made before the export halt. This is part of a larger debt estimated at around $1 billion in unpaid arrears owed to all IOCs for the period between September 2022 and March 2023.

The newly crafted agreement attempts to address the issue of future payments through a revised commercial structure. According to Iraqi officials who spoke to Reuters, the preliminary plan involves an independent trader handling crude sales from Ceyhan at the official prices set by Iraq’s State Organization for Marketing of Oil (SOMO).

From each barrel sold, $16 will be directed into an escrow account and then distributed proportionally among the producing companies, with the remainder of the revenue going to SOMO. While this mechanism is designed to provide a more transparent and reliable payment stream, the draft plan, according to the officials, does not specify how or when the billion-dollar historical arrears will be settled.

Mossavar-Rahmani noted, however, that DNO has actively proposed solutions to Erbil to resolve the matter through what he termed “easy fixes that can be quickly agreed,” suggesting the company believes a mutually acceptable path forward is achievable.

The urgency to find a solution has been immense, given the devastating economic impact of the nearly three-year suspension. The halt was initiated after a ruling by an arbitration court at the International Chamber of Commerce in Paris found that Turkey had violated a 1973 pipeline agreement by facilitating independent KRG oil exports without Baghdad's consent.

The ECO IRAQ Observatory, an economic monitoring group, has calculated the cost of the shutdown to Iraq to be over $11 million per day, accumulating to a staggering loss of more than $4 billion annually. For the KRG, the suspension cut off its primary source of independent revenue, creating profound fiscal challenges and leading to persistent difficulties in paying public sector salaries.

This long-running dispute, as previously detailed by Kurdistan24, transcends mere commercial or technical disagreements. At its core are fundamental constitutional questions regarding the authority over natural resources, which the 2005 Iraqi Constitution grants as a shared power.

Many in the Kurdistan Region argue that successive federal administrations have failed to honor this constitutional compact, instead politicizing oil and budget issues to exert financial pressure on the KRG. The chronic failure to pass a comprehensive federal oil and gas law has left the nation's energy sector mired in legal uncertainty, damaging Iraq’s international credibility and deterring foreign investment.

Despite these challenges and the immense financial pressure of the export halt, DNO has demonstrated its long-term commitment to its operations in the Kurdistan Region. During the suspension, the company has been forced to sell its net entitlement share of oil "on a cash and carry basis" via road tankers to local refineries for a price in the low USD $30s per barrel—a fraction of its international market value.

Yet, even under these difficult circumstances, DNO and its partner Genel Energy have stepped up spending to repair damage to the Tawke and Peshkabir fields following drone attacks in July 2025.

Furthermore, the company has laid out ambitious plans for future growth, including the drilling of eight new wells in the Tawke license in 2026, with the goal of reaching a gross operated production of up to 100,000 bpd. This commitment to future investment signals a deep-seated confidence in the region’s resource potential, provided a stable and commercially viable export framework is firmly in place.

As the final details are hammered out, there is a palpable sense that a historic turning point has been reached. Technical preparations have been underway for weeks, with extensive testing and maintenance performed on the pipeline infrastructure.

The agreement is viewed as a critical step toward stabilizing the financial relationship between Erbil and Baghdad, with KRG spokesperson Peshawa Hawramani emphasizing that it is designed to ensure the federal government upholds its responsibility to disburse public sector salaries without delay.

DNO’s welcome of the deal, paired with its clear articulation of commercial requirements, sets the stage for the final and most crucial phase: translating a landmark political agreement into a sustainable and mutually prosperous operational reality.