Page 12 - MEOG Week 09 2021

MEOG PROJECTS & COMPANIES MEOG

Dana Gas sees major upside for Kurdish gas

KURDISTAN INTERNATIONAL operators in the Kurdis- the KRG significant amounts of money from
tan Region of northern Iraq have spoken pos- [not having to import] diesel fuel,” he said.
itively in recent months about the reliability of Allman-Ward added: “While the pandemic
payments for oil and gas sales following a three- has restricted the speed of the development of
month hiatus in late 2019/early 2020. Adding to our expansion plan in the KRG, we are moving
the positive sentiment are Erbil’s efforts to make ahead with the civil engineering works, and a
up for the resultant shortfall. new Q1 2023 timetable has been set for first gas.”
Pearl Petroleum Blocks
One of the main benefactors of this stability is Meanwhile, he was quoted in February as say-
likely to be UAE-based Dana Gas, which holds a ing: “For the second train, we are in discussions
35% stake in the Pearl Consortium and is part- with a number of different parties. [The Federal
nered by affiliate Crescent Petroleum, Austria’s Iraqi government] has expressed interest and I
OMV, Germany’s RWE and Hungary’s MOL. have every confidence we will be responding to
Pearl operates the Khor Mor and ChemChe- that interest,” he said. Another of those parties is
mal gas fields, whose combined reserves com- understood to be a Turkish company.
prise 4.4 trillion cubic feet (125bn cubic metres) The CEO provided some further clarity to
of gas, 136mn barrels of condensate, 13.3mn MEOG: “For the second 250mmcf per day gas
tonnes of LPG and 18mn barrels of oil. train (KM500), exports to Turkey could be
Dana Gas CEO Dr Patrick Allman-Ward has achieved by extending the pipeline network to
previously said that the firm believes “that the the border with Turkey, where there is already
Khor Mor and Chemchemal Fields will most an existing gas pipeline ready to be connected, or
likely be the biggest gas fields, not just in the for gas sales to the Federal Government of Iraq
Kurdistan Region Iraq, but the whole of Iraq, through the existing pipeline from Khor Mor to
making them world-class assets”, and with such Jambour, [which] was originally built as a gas
expectations it is perhaps unsurprising that the pipeline.”
company late last year agreed to sell its onshore
Egyptian producing oil and gas assets for up to Cash is king
$236mn to focus on Kurdistan. Meanwhile, he alluded to the confidence instilled
In March 2019, the company announced that by the Kurdistan Regional Government’s (KRG)
Pearl had signed a new 20-year gas sales agree- efforts to improve the reliability of payments and
ment with the KRG to “enable the production resolve its arrears. “Despite the extremely diffi-
and sales of an additional [2.6 bcm pear year] cult fiscal challenges faced by the KRG, they have
that the consortium aims to produce by 2021 … made regular monthly payments since March
to boost much-needed local domestic electricity 2020 and have maintained their commitment to
generation”. pay down past receivables. Pearl Petroleum con-
Pearl reached critical financial and contrac- tinues to engage constructively with the KRG to
tual settlements with the KRG in the second half ensure timely payments,” he said.
of 2017, paving the way for further development Meanwhile, he added that the KRG’s formula
of their respective assets. This came after eight for repaying outstanding invoices, which is
years of international legal disputes over the based on Brent prices exceeding $50 per barrel in
terms governing licences for the Khor Mor and any month and the incremental revenues being
Chemchemal gas fields. shared 50:50 between the KRG and its partners –
Under the deal reached with Pearl, the con- will see “outstanding receivable […] repaid over
sortium committed to invest $400mn of the the course of 2021”.
agreed $1bn payment from the authorities in In order to help finance the Khor Mor
expansion at the larger Khor Mor field to expand expansion project, the Pearl Consortium is in
output to 6.7 bcm per year by 2021. talks with the US Government’s Development
The first expansion train is expected to come Finance Corp. for a $250mn loan.
into operation in early 2023, with the second “This loan has bipartisan support from both
coming online in late 2024. sides of the aisle in the US because they want, of
Speaking exclusively to Middle East Oil & course, to increase the amount of gas production
Gas (MEOG), Allman-Ward, said that the first in Iraq and thereby reduce reliance of Iraq on Ira-
250mn cubic feet (7mn cubic metres) per day nian gas imports. We hope to see confirmation
train from Khor Mor was sold to the KRG in of that in the next months or so,” the CEO was
2019. recently quoted as saying by S&P Global Platts.
“The gas is intended for domestic electricity As Allman-Ward says, for Dana Gas, the
production and will allow existing turbines [at improved stability of payments and a long-stand-
Dohuk] to be powered by gas instead of diesel, ing relationship provide “great confidence”
which will not only have a significant environ- for the company’s future growth plans, which
mental benefit in reduction of CO2, NOx, SOx include more than doubling its production in
and particulate matter emissions but also save the region.™

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