Natural Gas Output In Kurdistan Set To Jump

Natural gas output in Iraqi Kurdistan is set to jump as the regional government settles a court case with a consortium of companies active in the area, according to Reuters’ conversation with Dana Gas.

The Pearl Consortium – which consists of Dana, Crescent Petroleum, OMV, MOL and RWE – agreed to a $1 billion payout in exchange for violations of a 10-year-old deal to develop the Khor Mor and Chemchemal fields. Those areas are said to hold 17 trillion cubic feet in reserves, which could fulfill all of Europe’s gas needs for a year.

But the agreement caused tensions between the KRG and European producers when Pearl began accusing the government of underpaying for gas liquids production. The disagreements, as well as substantial delays in field development, caused a court case in London. Its settlement also stipulates that Dana Gas would double output from the fields, according to the company’s managing director Majid Jafar. Now the two facilities will produce 800 million cubic feet a day, he said in an interview.

“This is only the next phase. These fields could potentially produce several times more,” he said, adding that the contractual increase would be implemented in two years. “We have the obligation to maximize the value of resources for Kurdistan and Iraq. We first and foremost need to meet local demand. But there are enough reserves for exports as well.”

A previous ruling by a U.K. arbitration court declared Pearl the victor of a $2 billion settlement for delayed payments from Kurdistan. The legal body also substantiated additional accusations of purposeful tampering with Pearl’s work on fields in Kurdistan, though damages had not been awarded at the time. The stipulation for Pearl to increase output in the KRG in the coming years suggests the companies are ready to produce gas in the area for the long-run.

By Zainab Calcuttawala for Oilprice.com

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