Emirates firm takes the chair at Norway's DNO

OSLO: RAK Petroleum of the United Arab Emirates has strengthened its grip on Norwegian oil firm DNO International, persuading shareholders to replace their long-time chairman with RAK's own chief executive and sparking fresh takeover talk.

Since RAK began buying shares in DNO two years ago analysts have speculated it may buy the whole company, who’s primary producing asset is the Tawke oil field in Iraqi Kurdistan.

Bijar Mossavar-Rahmani, RAK's chief executive since 2008, was named chairman of the DNO board at the company's annual general meeting on Thursday, the company announced.

Thrown off was Berge Gerdt Larsen, who had served as DNO's executive board chairman since 2002 and chief executive from 1996 to 2002.RAK now holds a 30 percent stake in DNO.

Shares in DNO were up 0.3 percent at 7.20 crowns at 1500 GMT, while the main Oslo bourse index was up 0.8 percent. Before the announcement the share price was down nearly 2 percent.

In a statement Mossavar-Rahmani said after Thursday's appointment that RAK sought to "take a more active role to stabilise DNO International and then drive it to realise its full potential."

He said he would work in collaboration with other shareholders and DNO's management.

First Securities analyst Teodor Sveen Nilsen said the boardroom switch did not alter his view of DNO's prospects.

"It's not unnatural that the largest owner, RAK, has the board chairmanship," said Sveen Nilsen. "But this could revive speculation about a RAK offer to buy DNO."

At last year's annual meeting DNO shareholders elected two board members proposed by RAK, including RAK board member and former U.S. ambassador to Iraq Zalmay Khalilzad, who subsequently declined to serve.

Three months ago Mossavar-Rahmini took the seat that had been designated for Khalilzad.

Copyright Reuters, 2011