The oil producer DNO is continuing operations in Iraq’s Kurdistan region, the firm said yesterday, even as Islamic State militants extended their gains in northern Iraq, the region where the firm’s key operations are located.
“We continue to conduct operations at all DNO sites throughout Kurdistan within our established security protocols,” said a spokesman for the company, in which RAK Petroleum holds a significant stake. “Needless to say, we are in regular contact with the authorities and closely monitor developments.”
The Islamic State, which has declared itself a caliphate in the parts of Iraq and Syria it controls, clashed with Kurdish Peshmerga forces on Wednesday in the town of Makhmur near Erbil, the capital of the Kurdish semi-autonomous zone.
In the latest advance, its fighters seized Makhmur and the mainly Christian town of Tilkaif, as well as Al Kwair, witnesses said. Reports said they had taken the country’s largest dam near Mosul that could enable its fighters to flood areas near Baghdad and Mosul.
Genel Energy, the largest oil producer in the Kurdish enclave, is confident the northern region will maintain unimpeded exports of its own, and the company plans to ship 20,000 barrels a day by pipeline in the second half of the year, Julian Metherell, its chief financial officer, said this week.
While insurgents have seized oilfields and threaten the prime minister Nouri Al Maliki’s government, most of the country’s production is flowing without interruption in the south. Crude sales rose 5 per cent last month to 2.44 million barrels per day.
“The heart of Iraq’s oil industry – and the economic engine of the country – is located in the south, far removed from the Islamic State’s latest military adventure,” Geoffrey Batt, managing director of the Euphrates Iraq Fund, told Bloomberg News. “In July, Iraq earned US$7.8 billion from southern oil exports, meaning one month’s exports could buy Iraq’s entire bond issue roughly three times over.”
The slide in Iraq’s dollar bond since June, when militants overran much of the country’s north, is being contained by rising oil revenue as exports increase in the south.
The yield on Iraq’s January 2028 dollar security has jumped 109 basis points to 7.37 per cent since tumbling to a 16-month low on June 9. The rate remains below this year’s high of 7.74 per cent in February, and compares with a 30 basis-point increase in the JP Morgan Chase’s Emerging Markets Global Sovereign Bond Yield Index.
* with agencies
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