UPDATE 2-DNO "quite confident" of Iraq oil exports in 2008
(Adds possible Syria route, details, quotes; updates share)
OSLO, April 3 (Reuters) - Norwegian independent oil producer DNO (DNO.OL) is "quite confident" it will get a licence to export oil from Iraq in 2008, enabling it to quadruple production, Chief Executive Helge Eide said on Thursday.
DNO, which gets most of its production from Yemen, is the first western oil company to begin new exploration and production in post-war Iraq under a deal with the Kurdish regional authorities in the north.
"We are not involved directly with that process but there has been quite a number of positive signals which makes us quite confident that it will happen within this year," Eide told Reuters on the sidelines of DNO's capital markets day meeting with investors.
The Kurdish authorities are negotiating the export licence with Baghdad on behalf of DNO.
Eide said that after gaining an export permit, DNO could quickly boost its oil production in Iraq to about 30,000 barrels per day from about 7,000 barrels on average in the first two months of 2008.
"We have 90,000-100,000 in well capacity (per day) and the export facility can take 50,000 barrels. Immediately when we have exports in place, we can ramp up to 50,000 barrels -- and we get 60 percent of that," he said.
The 60 percent is DNO's working interest in the Tawke field in the Kurdish region of north Iraq. It has built a connecting pipeline from Tawke to Iraq's northern pipeline to Turkey.
Magne Normann, managing director for DNO's operations in Iraq, said the company had other export options which were "just as probable as the Turkish option".
Normann said DNO's facilities were only 45 km from an oil pipeline in northern Syria which ends on the Mediterranean coast. Another option would be sending oil south, to Basra and the Gulf. All export routes need a permit from Baghdad, he said.
230 MILLION BARRELS
DNO said its best gross recoverable reserves estimate of Tawke stood at 230 million barrels of oil but had "substantial upside" when improved oil recovery methods were applied.
DNO repeated that its total untested resource potential in Iraq amounted to 1.5-2.5 billion barrels of oil equivalent. Besides Tawke, DNO has licences in the Dohuk and Erbil areas.
Its first well in Erbil, Howler 1, tested at 9,000 barrels per day. Wells in Dohuk, a much larger licence area, have so far been less successful.
Last month DNO revised its production sharing agreement with the Kurdish authorities, effectively cutting its stake. The company said then that the revision was a "step in the direction of exports", lifting its shares.
So far, DNO has sold its Iraqi oil on the local market at local prices.
DNO, which does not include any Iraq exports in its guidance, has forecast production of 6,000 barrels of oil equivalent per day (boed) from Iraq in 2008 and 15,000 barrels in total -- just above an average of 14,463 boed last year.
Shares in DNO hit 10-weeks highs earlier this week on growing hopes of an export deal with Iraqi authorities, but are still down some 20 percent over the past year due to a slower-than-expected ramp-up in Iraq and export woes.
The stock initially fell on Thurday, but rebounded to trade up 2.2 percent at 8.97 crowns by 1043 GMT, valuing the company at about $1.58 billion. Oslo's benchmark bourse index .OSEBX was up 0.4 percent.
