Norwegian oil and gas company DNO has restarted production from its Tawke oil field in northern Iraq's semi-autonomous Kurdish region.

Production was restarted by DNO last month to carry out well integrity checks and synchronise reservoir models, but has since continued because of the high demand for Tawke oil.

Currently, the field is producing an average of 40,000 barrels of oil per day. On the same licence, the adjoining Peshkabir field is still not operational, DNO said.

Due to a conflict over payments between Iraq and Turkey, international businesses operating in the Kurdish region have been compelled to reduce their output.

Most of the oil produced in northern Iraq, which makes up around 10% of the nation's total output, is transported via pipes to the Mediterranean port of Ceyhan in Turkey.

In March, Turkey cut off the pipeline after being ordered by an arbitration court to pay Iraq approximately $1.5bn (Tl40.67bn) in damages for carrying oil without Baghdad's consent, reported Bloomberg.

Half of Tawke's output is sent to the Kurdistan Regional Government while the remaining half is sold by DNO on behalf of the contractors to regional trading companies, with the oil being carried by road tankers.

DNO executive chairman Bijan Mossavar-Rahmani said: “While there is no light at the end of the export pipeline, we are seeing the headlights of more and more incoming tanker trucks loading up our Tawke cargoes on a cash-and-carry basis. Meanwhile, our strategy of broadening DNO’s portfolio beyond Kurdistan is bearing beautiful fruit.”

Earlier this month, DNO agreed to transfer the operatorship in the Brasse oil and gas discovery in the North Sea to OKEA.