Norwegian oil company DNO (DNO.OL) has announced the partial resumption of oil production at its Tawke field in the Kurdistan Region of Iraq. Despite the ongoing closure of a crucial export pipeline, DNO has managed to deliver oil to the local market at a reduced price.

During the second quarter, DNO reported an operating loss of $15 million, a significant contrast to the $81 million profit recorded in the same period the previous year. This decline is attributed to a drop in overall net production, which hit a 13-year low at 14,400 barrels of oil equivalent per day.

DNO suspended its operations in the semi-autonomous Kurdistan Region due to the shutdown of an export pipeline by Turkey in March. This closure followed an arbitration case at the International Chamber of Commerce (ICC) in Paris, which favored Baghdad.

Despite these challenges, DNO has succeeded in partially resuming production at its flagship Tawke field. The field is currently producing at a rate of 40,000 barrels of oil per day, down from the first quarter's 44,400 barrels. However, the nearby Peshkabir field remains inactive.

Bijan Mossavar-Rahmani, DNO's Executive Chairman, expressed cautious optimism despite the pipeline closure. He noted, "While there is no clear solution to the export pipeline issue, we are observing an increasing number of tanker trucks loading our Tawke cargoes for local transactions on a cash-and-carry basis."

In May, Iraq requested Turkey to restart oil export flows following an agreement with the Kurdistan Regional Government (KRG) concerning Kurdish oil sales and payments. Nevertheless, the timeline for resuming pipeline operations remains uncertain.

Approximately 50% of Tawke field's production is directed to the Kurdistan Regional Government, while the rest is sold to local trading firms and transported using road tankers. Due to the ongoing pipeline closure, oil prices have been discounted to slightly over 50% of their pre-closure levels.

The revenues generated from these oil sales are shared between DNO and its Tawke license partner, Genel Energy (GENL.L). The distribution is divided with 75% allocated to DNO and 35% to Genel Energy.

As the pipeline closure continues to pose challenges, DNO remains committed to adapting its operations within the Kurdistan Region. The focus remains on local sales and alternative transportation methods to ensure a sustainable continuation of oil production.