Oil industry executives are speculating that the oil company that offered DNO $700m for its oil assets in Iraqi Kurdistan is Royal Dutch Shell, the Financial Times reported Wednesday.[1]  --  "The offer signals that international oil companies are willing to put significant amounts of money into Iraq in spite of the security problems and lack of a legal framework," wrote Ed Crooks and Javier Blas.  --  DNO discovered an oilfield in northern Iraq in 2005.  --  The offer was rejected, but news of it caused the Norwegian company's share to rise 11% in Oslo.  --  On Thursday, the Irish Independent reported unequivocally that "Next month, the Iraqi government will pass new hydrocarbon laws allowing foreign companies to explore for oil," and said that "The dramatic change in policy means that the world's biggest oil companies are jockeying for position and getting ready to scramble for Iraq's vast energy resources."[2]  --  "[L]iterally billions of dollars are up for grabs," said Ireland's largest-circulation daily, but it might well have said "hundreds of billions"; it was not clear, though, on what information the unsigned piece in the Irish Independent might be based.  --  U.S. media appears to have paid no attention to the DNO story, except for MSNBC, which posted the Financial Times piece on its web site....

1.

WESTERN OIL GROUP EYES ASSETS IN IRAQ
By Ed Crooks and Javier Blas

Financial Times (UK)
August 23, 2007 (posted Aug. 22)

http://www.ft.com/cms/s/0/d25c0b22-5110-11dc-8e9d-0000779fd2ac.html

LONDON -- A large Western oil company has offered $700m for oil assets in Iraqi Kurdistan owned by DNO, the small Norwegian oil company. The offer signals that inter-national oil companies are willing to put significant amounts of money into Iraq in spite of the security problems and lack of a legal framework.

DNO refused to name the company, but industry executives speculated that Royal Dutch Shell was a possible bidder. Shell yesterday refused to comment.

DNO said it had received an "unsolicited expression of interest from a reputable financial adviser on behalf of a large international oil company," but had rejected the offer.

Helge Eide, DNO's chief executive, said in an interview with the *Financial Times* that the company would focus instead on maximizing the value of its Iraqi assets. "There is more and more interest in Iraq, and we have a unique position there," Mr. Eide said.

The offer values DNO's proven and probable Iraqi oil reserves at about $11.9 a barrel, according to analysts' estimates. DNO shares surged 11 per cent to NKr10.77 in Oslo.

DNO, which is quoted on the Oslo stock exchange, discovered the Tawke oilfield in late 2005, after signing a production-sharing agreement in June 2004 with the Kurdish regional government, a semi-autonomous area of northern Iraq.

In June, it became the first foreign oil company to pump crude oil in Iraq since the nationalization of the country's hydrocarbons industry 35 years ago, albeit on a very small scale.

The company is delivering its production from the Tawke oil field to the domestic market in Iraq at a rate of about 6,000 barrels a day.

Mr. Eide said that DNO hoped to be able to begin exports in November, once it had secured approval from the Kurdistan regional government to connect to a pipeline that could carry oil to Turkey.

Shell is seen as one of the oil majors that is most positive about doing business in Iraq.

In 2005, Shell signed an agreement with Baghdad to study the northern Kirkuk oilfield. The area is the subject of a dispute between the Kurdish authorities and the Iraqi central government.

Shell has worked for the Iraqi oil ministry analyzing the data on the oilfield.

A number of other international oil companies have signed similar co-operation agreements, or are training Iraqi petroleum engineers.

BP, Statoil, Total, Eni, and Repsol YPF are understood not to be behind the bid to DNO.

Industry executives said it was unlikely that a U.S.-based company would have made the offer. ExxonMobil and Chevron refused to comment on specific Iraqi projects.

2.

Business

OIL MINNOW PETREL'S HARD SLOG IN IRAQ LOOKS SET TO PAY OFF

** The Irish firm hopes to become a major player in the Iraqi oil business **

Irish Independent (Dublin)
August 23, 2007

Original source: Irish Independent

A major international news website reported the following details yesterday under a heading that said with some understatement: 'In other news in Iraq.'

The "other" news was that 14 U.S. soldiers were killed when a Black Hawk helicopter in which they were travelling crashed in northern Iraq.

And at least 20 people were killed and 50 injured when a suicide bomber rammed a fuel tanker into a police station in the northern oil city of Baiji.

The "major" news was that Prime Minister M. Nouri Maliki had rejected U.S. criticism of his administration, saying "no one has the right to place timetables" on its performance.

With the security situation so dire, one can understand the reluctance of many companies to operate inside the fractured country.

But behind the scenes there is plenty happening. One Irish firm has been doing business in Iraq since 1999 and soon it hopes to become a major player in the Iraqi oil business.

Next month, the Iraqi government will pass new hydrocarbon laws allowing foreign companies to explore for oil.

The dramatic change in policy means that the world's biggest oil companies are jockeying for position and getting ready to scramble for Iraq's vast energy resources.

With the putting in place of the first legal framework for investing in the country's energy, literally billions of dollars are up for grabs.

Major global firms have stayed away from Iraq, which has the world's third-largest oil reserves, because of the continuing bloody insurgency and lack of legal protections.

Companies such as Shell and BP have banned their personnel from Iraq but smaller companies such as Petrel Resources, based in Dublin, have continued to operate there.

Now, the big players are expected to woo the smaller operators or even take them over -- but Petrel is determined to ignore the overtures and has vowed to remain independent.

Just yesterday, Norwegian oil minnow DNO claims it rejected a $700-m bid from "a large international oil company" for its oil licences in Iraqi Kurdistan.

The offer was apparently some time in early July, although confidentiality agreements prevented the company from commenting further.

Minnows such as Petrel, DNO, Addax Petroleum, and WesternZagros have taken on the initial risk and found oilfields normally far above their league in size.

But the larger companies have the financial muscle to develop these fields and pay the small explorers well for the risk they initially carried.

Analysts say the relatively safe areas in Iraqi Kurdistan will be a good way in for some companies, although the prize fields are the large Kirkuk fields, areas in the more unstable southern part of the country, and the large untapped oil and gas potential in the lawless west.

Some believe that the time for the minnows and high-risk explorers is not over in Iraq because Iraq's most important oil and gas areas are still being engulfed in violence and suffer from a low level of government control.

None of this has put off Petrel, which had its AGM [annual general meeting] in Dublin yesterday.

The firm employs 13 freelance contractors in the country. It has contracts worth $200m and managing director David Horgan expects the Iraqi government to ratify its claim to the oil rights for a large chunk of land in western Iraq.

Petrel, which is backed by Japanese industrial giant Itochu, is also hoping to win the rights to a "super giant" oilfield, which could yield over 10bn barrels of oil.

Mr. Horgan rejects statements by some observers that the oil laws will trigger an unseemly scramble for rights that will have no benefit for ordinary Iraqi people.

"In normal circumstances a state oil company would limit foreign involvement, but Iraq's rare circumstances require attractive terms to entice foreign investment and technology.

"Our competitive advantage is our relationships built up over 10 years. We have the capacity and the ability to increase quickly recoveries from existing reservoirs and to add new barrels to Iraq's reserves."

Mr. Horgan added: "The successful management of the large Subba & Luhais oil field development in Southern Iraq shows that dedicated contractors can operate on the ground.

"To date, we have suffered no direct incidents and have enjoyed the warm co-operation of local communities. The Iraqi authorities, and especially the Ministry of Oil, continue to be committed to and supportive of our efforts."

Petrel also points out that it is employing Iraqis at a time when unemployment has reached rampant levels.

Mr. Horgan said: "Our Iraqi and international staff have shown exceptional dedication and flexibility.

"Apart from on the ground activities, they have produced tenders for the development of oil and gas fields which are considered the technical benchmark by the relevant bodies.

"Our Technical Cooperation Agreement analysis and technology transfer was also judged first rate. Our pioneering exploration work in the Western desert blended local expertise with state of the art technology."

The passing of the new oil laws next month will mark a milestone for Petrel and Mr. Horgan says the firm is ready to capitalise on its years of sticking its neck out.

"We are demonstrating that we can operate in the oil-rich south of Iraq. We will continue to aggressively deepen and broaden our activities in this region."