The big story of the day involves the Norwegian exploration and development company DNO being suspended from carrying out its oil operations in Iraqi Kurdistan after the Oslo Stock Exchange published details of the US$29.7 million share transaction between DNO and Genel Enerji where the Turkish company took around a 5% stake in DNO.
An investigation by the OSE discovered that the KRG acted as an effective middleman through the use of a clearing account in the United Kingdom registered personally to the Kurdistan Regional Government’s (KRG) natural resources minister Dr Ashti Hawrami.
IHS Global Insight Middle East energy analyst Samuel Ciszuk has kindly given ArabianOilandGas.com his expert opinion:
The seemingly over-the-top reaction with threats of full termination will do little to instil confidence in the institutional framework of the region, which hitherto has been seen as the stable, safe, and business-friendly part of Iraq.
The extreme reaction therefore risks backfiring, as this incident also points to the potential pitfalls in doing business with a government entity that has not been fully recognised and has young and underdeveloped institutions.
While there has been no proof in the media of Hawrami or anyone else making any personal gain from illicit trading, the fact that a personal clearing account was used points at least to a certain operational amateurishness—and perhaps naïveté—which in this case threatens to completely destroy one of their main investors.
– Thanks for that Samuel. If anyone has anything else to add please email us or leave a comment.
