Norwegian oil and gas operator DNO announced on Wednesday that it has started an orderly shutdown of its operated oil fields in the Kurdistan region of Iraq.

The company said in a statement that shutdown started four days after it was instructed to temporarily cease deliveries to the Iraq-Turkey Pipeline destined for the Mediterranean port of Ceyhan following an arbitration ruling in favour of Iraq against Turkey for exporting Kurdish oil without Baghdad’s approval.

DNO had diverted oil production to storage tanks, but capacity is limited, as previously announced.

The Tawke and Peshkabir fields averaged combined production of 107,000 barrels of oil per day in 2022, representing a quarter of Kurdistan’s total exports.

Peshkabir production was halted last [Tuesday] night and plans drawn up to conduct deferred maintenance, the statement said. Tawke production shutdown has started but will take an additional day or so given the much larger numbers of wells spread across some 10 kilometres, the statement said.

“It is unfortunate it has come to this given the likely impact of a continuing supply disruption on oil prices and at a fragile time in global financial markets,” said DNO’s Executive Chairman Bijan Mossavar-Rahmani.

Prior to the shutdown, the Iraq-Turkey Pipeline carried some 400,000 barrels a day of Kurdish oil and another 70,000 barrels a day of Iraqi oil for export to Mediterranean and other refineries.

Read more: Oil firms halt or reduce output in Iraqi Kurdistan, further outages loom

(Writing by SA Kader; Editing by Anoop Menon)