Norwegian group DNO has begun test production for Iraqi oil exports and will soon boost volume to 50,000 barrels a day, it said, kindling talk of a potential bid for the company.

The oil company, whose shares hit multi-year highs on Thursday, gave no indication whether it would be paid for the exports from Iraqi Kurdistan, 16 months after it halted a previous export flow because the central government had blocked sales proceeds.

"We are doing export production tests to ensure a good and secure ramp-up in the near future, but we do not have any information to provide apart from that," DNO spokesman Tom Bratlie said.

"We will just have to return to the market when we receive further instructions and more information."

Analysts said that if DNO manages to resume exports profitably it could become an acquisition target by larger producers looking for a foothold in the region.

"Those Tawke reserves are interesting to any company that wants oil," Gudmund Halle Isfeldt, a DnB NOR Markets analyst, said. "It's a matter of surface complications, like the framework agreement with the government and the oil law."

If Baghdad does approve profitable terms, he added, oil companies in Asia and the Middle East would see DNO as a takeover candidate.

The company said on Thursday it was producing test volumes of about 10,000 barrels per day from its pioneering Tawke field, and that it would quintuple production "in the near future".

Exports of 50,000 barrels per day to the Turkish port of Ceyhan would be reached in "two to three days", an official of North Oil Company, which operates an export terminal for Tawke oil, said.-Reuters