UPDATE 2-DNO awaiting Iraq payment deal, Q3 lags forecast

* Operating profit 148 mln crowns vs 545 mln avg fcast

* Q3 provision of 396 mln crowns

* To focus on local sales, says funding comfortable

* Shares down 0.9 pct on a rising Oslo bourse

By Aasa Christine Stoltz and Joergen Frich (Adds detail, comments, share price)

OSLO, Nov 11 (Reuters) - Norwegian oil producer DNO International (DNO.OL) said it would continue to focus on local sales in Iraq until a payment deal for exports is in place as it reported lower than expected third-quarter operating profit.

DNO has been a trailblazer in Iraq, signing an exploration deal with the Kurdish authorities soon after the 2003 U.S.-led invasion to topple Saddam Hussein.

After settling a dispute with Kurdish authorities earlier this year, DNO restarted operations in northern Iraq on Oct. 6, but has so far not secured a payment deal for export of oil from the Tawke field.