Page 4 - MEOG Week 07 2021

MEOG COMMENTARY MEOG

Kurdistan operators provide

updates as payments remain stable

DNO and Dana Gas provided updates on their operations in Kurdistan
last week while indicating continued stability in government payments.

KURDISTAN M&A activity returned to the Kurdistan Region prices and more visibility on Kurdistan export
of northern Iraq last week as optimism appears payments, DNO will ramp up drilling of new
to be back in vogue. As ExxonMobil farmed out, development wells at the Tawke licence to as
WHAT: Norway’s DNO consolidated its position in the many eight this year from only one in 2020 and
International operators semi-autonomous region with plans to ramp up conduct multiple workovers on existing produc-
of major Kurdish assets operations this year. ing wells in our drive to maintain production
last week provided Meanwhile, UAE-based Dana Gas above 100,000 bpd.”
encouraging news as announced that the Federal Iraqi authorities are The company halted drilling activities at
payments for sales are interested in buying gas produced in the Kurd- Tawke in Q2 last year in the wake of the coro-
maintained and new ish north in order to ease Baghdad’s reliance on navirus (COVID-19) pandemic and a hiatus of
opportunities arise. Iranian imports. payments from the KRG, but resumed and fast-
tracked operations in June.
WHY: DNO
Suffering from the DNO provided an operational update on its Gassing up
twin challenges of the activities in Kurdistan and announced it had In another positive update, the CEO of fellow
pandemic and the oil acquired US super-major ExxonMobil’s 32% operator Dana Gas, Patrick Allman-Ward, said
price drop, the KRG stake in the 324-square km Baeshiqa licence. that the Federal Iraqi government was one of the
halted payments to IOCs The deal takes DNO’s stake in Baeshiqa to parties interested in buying gas sales from the
in early 2020, but it has 64% and the company has plans to continue expansion of the Khor Mor gas field.
laid out plans to clear exploration and appraisal work. It bought the Khor Mor is operated by the Pearl Consor-
the debt. first 32% participation from ExxonMobil in tium in which Dana owns a 35% stake, and is
2018, and became operator of the licence. partnered by affiliate Crescent Petroleum, Aus-
WHAT NEXT: The remaining 36% in the field is split tria’s OMV, Germany’s RWE and Hungary’s
If payment stability can between Ankara-owned Turkish Energy Co. MOL. The field is currently undergoing a two-
be maintained, the region (TEC, 16%) and the Kurdistan Regional Govern- phase expansion, with each train adding 250mn
may be set for a fairly ment (KRG, 20% carried). Baeshiqa is located in cubic feet (70.8mn cubic metres) per day of gas
significant rebound. south-west Kurdistan close to Mossul. and increasing the total output from the field to
DNO’s executive chairman Bijan Mossa- roughly 940 mmcf (25.5 mcm) per day from the
var-Rahmani said: “By increasing our stake in current 440 mmcf (12.4 mcm).
the Baeshiqa licence now, we demonstrate our Allman-Ward said late last week that Dana
belief in its ultimate potential … Following the Gas is discussing a gas sales agreement for the
stabilisation of oil prices and export payments second train with several parties, including one
in Kurdistan, DNO is stepping up spending on Turkish company.
new opportunities.” “For the second train, we are in discussions
The company added that it would fast-track with a number of different parties. [The Federal
early production at the licence following the Iraqi government] have expressed interest and I
delivery of 15,000 barrels of crude for export have every confidence we will be responding to
from the Baeshiqa-2 and Zartik-1 wells at API that interest,” he said. The CEO noted that the
gravities of 40 and 22 respectively. DNO carried company’s production in Kurdistan had risen by
out testing work during Q3 2020 to determine 2% in 2020 to 32,250 barrels of oil equivalent per
the commerciality following the completion of day (boepd).
drilling these wells. In March 2019, Dana Gas announced that
Meanwhile, DNO repeated a mid-Janu- Pearl had signed a new 20-year gas sales agree-
ary statement that its operations at the Tawke ment with the KRG to “enable the production
licence, which contains the Tawke and Peshk- and sales of an additional [2.6 bcm pear year]
abir oilfields, had delivered an average 110,300 that the consortium aims to produce by 2021 …
bpd of oil in 2020, which was split around 50:50 to boost much-needed local domestic electricity
between the two assets. generation”.
Mossavar-Rahmani added: “With higher oil Pearl had reached critical financial and

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