The stock of Norway's DNO International, which pumps oil in Iraqi Kurdistan, has had a bumpy ride this past year. This week, however, the outlook for the oil junior took a definitive turn for the better. That was because, for the first time since they were suspended in September, Baghdad raised hope that Kurdish oil exports might soon restart.
Iraq's central government has long been at odds over oil jurisdiction with the government of the semiautonomous Kurdistan region, but ordered the exports' immediate resumption, said the Iraqi oil minister Dr Hussain al Shahristani. On Monday, DNO's stock surged 15 per cent on the news. Yesterday, the stock was still trading near that level. Dr al Shahristani has been unstintingly critical of the production-sharing contracts that Kurdish leaders signed with foreign oil firms to develop Kurdistan's neglected oil and gas resources. He has called the contracts "illegal" and "unconstitutional", a position vehemently disputed by the Kurds.
True to form, after allowing Kurdistan to export crude for the first time last June, through Iraq's northern pipeline into Turkey, Dr al Shahristani said the regional government should pay the two companies pumping the crude from its 17 per cent share of revenues. That would have left the Kurds with nothing, so DNO and Turkey's Genel Enerji went unpaid and soon stopped producing all but minor amounts of crude for the local market.
So why should anything be different now? The short answer is that an Iraqi national election is less than a month away, and the current prime minister, Nouri al Maliki, needs to woo Iraqi Kurds to his nationalist agenda to bolster his re-election chances. Mr al Maliki, not Dr al Shahristani, may now be calling the shots. @Email:firstname.lastname@example.org