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UAE’s Dana Gas hikes gas production by 30% in Kurdistan

UAE’s Dana Gas hikes gas production by 30% in Kurdistan

A further investment of over $600m is planned in the region over the coming few years

UAE-listed Dana Gas and its partner Crescent Petroleum announced that gas production capacity at the Khor Mor field in the Kurdistan region of Iraq has increased by 30 per cent.

The gas field is jointly operated by the two companies on behalf of Pearl Petroleum.

The expansion at the Khor Mor gas processing plant consisted of a series of plant additions and modifications to de-bottleneck throughput, raising output capacity from 305 million standard cubic feet per day (mmscfd) of natural gas to 400 mmscfd, with over 15,000 barrels per day of condensate, a statement said.

The increase delivers “much-needed gas supply to fuel power plants in the region”, it added.

The plant, which began operating in 2008, supplies natural gas to power plants in the towns of Chemchemal and Erbil, and will soon supply a new plant in Bazian.

It also produces LPG and NGL, which are sold and trucked to the local markets.

Under an agreement signed in January 2018 with the Kurdistan Regional Government (KRG), Pearl Petroleum will sell the additional quantities of gas to supply the power stations with fuel, and further enhance electricity supplies.

Looking ahead, further investment is underway to expand production to 900 mmscfd per over the coming three years, together with associated liquids, the statement said.

Majid Jafar, CEO of Crescent Petroleum and managing director of Dana Gas, said: “This production increase marks an important milestone as we also commemorate 10 years of continuous production, and the beginning of a new chapter of expansion in operations and production which will see a further investment of over $600m over the coming few years and a more than doubling of production again.

“The gas we have produced has led to significant fuel savings and social and economic value for the economy, and we hope to grow this in the years to come from the significant resources of these fields.”

Dana Gas, Crescent Petroleum and its partners filed a case against the KRG in the London Court of International Arbitration in October 2013, accusing it of underpaying for gas liquids production.

In August 2017, they reached a full and final settlement with the KRG, including receiving $1bn in cash for past receivables and committing to expand their investment and operations in the region.

These expansion plans include a multi-well drilling programme now underway in both the Khor Mor and Chemchemal fields, as well as installation of additional gas processing and liquids extraction facilities.

Read more: Kurdistan pays $1bn to Dana Gas, partners to settle London case

Patrick Allman-Ward, CEO of Dana Gas, said: “Despite many challenges over the past 10 years we are proud to have maintained our production levels and operations and now with the settlement of all past receivables last summer and continuous payments since then, we look forward to significantly growing production to meet the growing demand for gas and electricity in the Kurdistan Region and Iraq.”

The Kurdistan gas project was established in 2007 as Dana Gas and Crescent Petroleum entered into agreement with the KRG for exclusive rights to appraise, develop, produce, market, and sell petroleum from the Khor Mor and Chemchemal fields in the Kurdistan region of Iraq.

Production from the plant in Khor Mor began 15 months later, in October 2008, and in 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as shareholders, and with OMV, MOL, and RWE joining the consortium subsequently with a 10 per cent share each.

Total investment in the Kurdistan gas project to date exceeds $1.4bn with total cumulative production over 250 million barrels of oil equivalent, which has resulted in over $20bn of fuel cost savings and economic benefits for the Kurdistan region and Iraq as a whole, the statement added.

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