Oil exports from the Tawke field in Iraq's Kurdistan region should reach 50,000 barrels a day within four weeks, Helge Eide, chief executive of DNO International ASA (DNO.OS), said Thursday.
Eide also told Dow Jones Newswires that he is hopeful the company will soon start to receive revenues from the exports.
"The Kurdish Regional Government has said a mechanism will be in place (for payments)," said Eide. "Lots of companies are starting to invest so it will be important for the region and contracts" that the issue is sorted, Eide said.
DNO, one of the first international companies to export oil from Iraq in the post-war era, started exporting from Tawke on June 1.
Uncertainty over revenue streams stems from ongoing haggling between the KRG and Iraq's central government, which has been unwilling to recognize contracts signed by the KRG with international companies. It has given its approval for exports in order to start generating much needed revenue, but remains non-committal about how those revenues will be divided between the different stakeholders.
Under the terms of its contract with the KRG, revenues from the Tawke project are split 60% to DNO and 40% to the government, until the company has recovered certain costs relating to the development of the field, Eide said.
"That's the model used for domestic sales," Eide said. DNO has been poised to export oil for a number of months, and has been selling some volumes into the domestic Iraqi market. It continues to sell between 2,000 and 6,000 barrels a day locally, he said.
If the company achieves the Tawke design capacity of 50,000 barrels a day, and oil prices remain at current levels, Eide reckoned DNO will have covered most of its development costs within a year. At that point revenues to DNO will be dictated by the kind of standard production sharing agreements, or PSAs seen elsewhere, he said.
"The government will take 80%-90% of revenues over the life of the field, with less of that at the start, and more at the end of the field's life," he noted.
Eide said Tawke oil will command a price below Brent oil because it's lower quality, but he declined to say what the margin will be.
While Tawke's design capacity hasn't yet been tested at 50,000 barrels a day, if the processing unit can do more, it will, Eide said.
He welcomed the entry of other international players to the region. While DNO is proud of its status as a front-runner in the region - together with Turkey's Genel Enerji AS, recent target of a takeover by Heritage Oil Ltd. (HOIL.LN) - Eide said new players "will be positive for the region and bring "higher acknowledgment" to the activities there.