By Stine Jacobsen
OSLO, Feb 11 (Reuters) - Norwegian oil firm DNOInternational plans to increase production at its prizeTawke oilfield in Iraq's Kurdistan region, it said on Thursday,despite security challenges in the region and low crude prices.
The firm plans to double its investment to $100 million thisyear, most of it in the billion-barrel field, to raise thefield's output to 135,000 barrels of oil per day by mid-2016from 120,000 bopd now.
The move comes after Iraq's cash-strapped Kurdistan RegionalGovernment (KRG) began paying international oil companiesaccording to the terms of their contracts.
"What's giving us the confidence to pursue our investmentsis the fact that the payments coming to us now are regularized,they're predictable and they're tied to our contracts, and withthat we're comfortable making investments," DNO Chairman BijanMossavar-Rahmani told Reuters after presenting fourth-quarterresults.
The KRG, which owes oil companies billion of dollars, hasbeen making ad-hoc payments since last September to exportersthat had previously gone unpaid for months.
Operators have been reluctant to invest and further developassets in the region without the promise of regular payment, andthe KRG needs production to increase as it struggles to avert aneconomic collapse.
Iraqi Kurdistan has welcomed more than a million peopledisplaced by the war in Syria while Kurdish peshmerga fightershave been fighting back Islamic State fighters into the verynorth of Iraq.
More recently protests have broken out after the governmentunveiled new austerity measures to avert an economic collapsethat officials warn could undermine the war effort against IS.
But DNO says it can do business despite the region'schallenging security situation.
"In terms of our operations in Kurdistan we saw the worst ofthat threat in the summer of 2015 when IS came into Kurdistan,"said Mossavar-Rahmani. "Since then the security situation so faras our operations are concerned have eased considerably, but wecontinue to be very vigilant.
"The situation is difficult in the region but we feel safeoperating in Kurdistan. We have had no disruptions at all to ouractivities throughout this period," Mossavar-Rahmani said.
Another international oil producer in the region, GenelEnergy, said earlier this week it will resume drillingwork at its Taq Taq oilfield in the coming weeks to ramp upproduction..
DNO presented fourth-quarter results on Thursday that laggedforecasts due to weaker-than-expected cash flow. (Writing by Gwladys Fouche; editing by Susan Thomas)