OREANDA-NEWS. Norwegian oil firm DNO has stepped up investments at its flagship Tawke oil field in the Kurdistan region of Iraq after receiving seven consecutive months of receivable payments totaling $175mn.

Production at Tawke averaged 118,900 b/d in April, with 117,800 b/d delivered for export. Output was down to an average of 91,700 b/d during the first quarter because of to an extended closure of the Turkish portion of the pipeline delivering Kurdish oil to market during the second half of February and first half of March.

The Kurdistan Regional Government (KRG) has also struggled to pay oil companies for output in the past in line with its contractual obligations, limiting appetite for investment in production. But a new payment system instituted by KRG has facilitated payments allowed oil companies to increase their outlay.

"We jump started investments at Tawke once Kurdistan provided regularity and predictability of payments," said DNO executive chairman Bijan Mossavar-Rahmani. He said: "[We have] every indication and confidence it will continue. It is well understood in Kurdistan that oil in the only source of revenue. Oil companies will only make investments if they have their revenue stream to support that."

But Mossavar-Rahmani also issued a veiled warning that production could be squeezed if payments from the KRG were to slow again.

"Tawke could be a Ferarri: if you hit the accelerator it goes, but it also has very powerful brakes. If we need to stop, we hit the brakes and it stops. And so we will continue to manage our investment, bearing in mind most importantly payment arrangements, but also security conditions which require us to step up or step down as appropriate," Mossavar-Rahmani said.

DNO announced its first quarterly profit from operating activities since mid-2014, a modest $8mn that it expects to increase going forward. The company said it will drill five new production wells at Tawke and is targeting a production of 135,000 b/d this year.

DNO also plans to drill appraisal wells at its Peshkabir discover. DNO has operations in Oman and Yemen, as well.

"We are actively looking at other opportunities both within our footprint and beyond it," Mossavar-Rahmani added.