The Kurdistan Regional Government has announced the successful delivery via pipeline of the first quantities of natural gas from the gas field at Summail to fuel the Duhok Power Station (pictured).

The Summail Gas Field lies within the area of the Duhok Production Sharing Contract (PSC) and is operated by the Norwegian company DNO, which together with Anglo-Turkish PSC partner Genel Energy, signed a landmark gas sales agreement (GSA) with the KRG on 18 September 18 2013.

Long-term deliveries are expected to reach 120 million cubic feet per day sold on a take-or-pay basis for the duration of the production, showing the KRG can successfully develop its newly discovered gas assets in Kurdistan.

Under the long-term GSA, the KRG will purchase up to 120mmscf/d. Initial volumes will start at around 55mmscf/d, ramping up to 120mmscf/d within the next few months, and thereafter itis hoped that gas production will eventually rise to around 200mmscf/d.

The Duhok Power Station is a 750 MW power plant in the city of Duhok, located 40 kilometres from the field. The power station’s six turbines have been run on expensive diesel until now, due to significant delays in originally expected gas deliveries from the Khor Mor area. Each of the turbines consumes around 24 million litres per month of diesel, or around 27.50mmscf/d natural gas.

The locally-produced natural gas will displace diesel from the power station and is part of a KRG strategy to save the people of Kurdistan millions of dollars every year in costly diesel imports for power generation.

Natural Resources Minister Ashti Hawrami said that the successful commissioning of the Duhok Power Station operated by Mass Global, the Kurdistan main and feeder gas pipelines constructed by Kar Group, and the Summail gas facilities built by DNO, represented a significant step forward for the Kurdistan Region.

By John Lee.

Genel Energy and DNO International have signed a Gas Sales and Purchase Agreement with the Kurdistan Regional Government to supply gas from the Summail field in the Dohuk licence in the Kurdistan Region of Iraq.

The gas will partially displace diesel currently used to generate electricity in a 500 MW power plant in the city of Dohuk (pictured), located 40 kilometres from the field.

Initial deliveries will be around 100 million cubic feet per day sold on a take-or-pay basis for the duration of the Production Sharing Contract or until deliveries reach one trillion cubic feet. The price of gas will range between $3 and $4 per thousand cubic feet over the life of the contract.

The Prime Minister of the Kurdistan Regional Government, Nechirvan Barzani, and the Minister of Natural Resources, Dr. Ashti Hawrami, were present at the signing ceremony held in Erbil today and are signatories to the contract.

The next step in the fast-track development of the field is re-entry and completion of the Summail-1 discovery well and the installation of a 24 inch pipeline to transport gas to what is slated to become the regional gas gathering and distribution network. First gas from Summail-1 is planned in January 2014. The second well, Summail-2, will spud in the fourth quarter and the Summail-3 well is scheduled for 2014.

Following the development of the Summail field, the focus will shift to the appraisal of the oil potential of the Dohuk license.

DNO International announced today that it has commenced extensive testing of the Tawke-23 exploration well in the Kurdistan region of Iraq.

The well is the second horizontal well drilled by the Company in the Tawke field and has encountered continuous oil shows within a 930 metre horizontal section in the main Cretaceous reservoir. The test program, expected to last up to three weeks, will focus on ten fracture zones with production potential.

The Company’s first horizontal well in the field, Tawke-20, tested 8,000 barrels per day from each of ten producing intervals in the Cretaceous reservoir and is currently on stream at an average rate of 25,000 barrels per day.

Also currently drilling in Kurdistan are two other Tawke horizontal development wells, Tawke-21 and Tawke-22, and the highly deviated Benenan-4 well in the Erbil license designed to appraise the additional reserves encountered in the Benenan field by the Benenan-3 well earlier this year. Benenan-3 has been completed and temporary production facilities installed, pending government approval to commence sales.

The Bastora-2 well in the Erbil license has been completed and temporary production facilities are undergoing installation. The Bastora field development plan was previously approved and the Ministry of Natural Resources now has authorized sales from the field with first deliveries anticipated in October.

Based on current trends, DNO International expects third quarter production from its fields in Kurdistan, Oman and Yemen will reach record gross levels of around 85,000 barrels of oil equivalent per day (boepd), corresponding to an estimated Company Working Interest (CWI) production of 50,000 boepd. Gross production for full year 2012 was 67,238 boepd, corresponding to 38,354 boepd on a CWI basis.

(Source: DNO)

DNO International today announced second quarter 2013 net profit of NOK 280 million on operating revenue of NOK 764 million.

Production climbed by nearly a third to 38,720 barrels of oil equivalent per day (boepd) on a company working interest basis from 29,061 boepd in the first quarter of 2013 and 23,234 boepd a year earlier.

“We continue to de-risk and deliver across our portfolio,” said Bijan Mossavar-Rahmani (pictured), DNO International’s Executive Chairman, “and most impressively in our operations in the Kurdistan region of Iraq.”

The Company set several key operational milestones during the second quarter at its flagship Tawke oil field, including highest production in a single day (112,949 barrels), highest sales in a single day (102,393 barrels), highest production from one well in a single day (25,052 barrels), largest number of tankers loaded in a single day (532 tankers or one every 2 minutes and 43 seconds).

Cumulative production from the Tawke field also passed the 50 million barrel mark earlier this year.

Mr. Mossavar-Rahmani noted that DNO International continues its active program of exploration, appraisal and development drilling while adding new acreage in both established and frontier basins, confident that the Company is well positioned financially and organizationally to capitalize on current and future growth opportunities.

During the first half of 2013, six onshore and offshore drilling rigs were active in eight blocks in three countries and four additional blocks in four countries were added to the portfolio. Operational cash flow of NOK 843 million exceeded capital spending of NOK 830 million during the first half of the year. The Company has maintained a robust capital structure with a free cash balance of NOK 1,648 million and net cash position of NOK 257 million as at June 30, 2013.

(Source: DNO)