Sharjah-based Dana Gas and Crescent Petroleum will resume the expansion of the Khor Mor gas field in Iraqi Kurdistan, which they operate as part of the Pearl Petroleum consortium.
The companies will invest $600 million to add 250 million cubic feet per day of gas production capacity, the companies said in a statement on Monday.
"The continuing receipt of payments in a timely manner gives confidence for our continued investment commitment as we enter the next exciting phase of growth with the Khor Mor expansion, which will be carried out under strict health protocols to ensure the safety of our staff and service providers," Dana Gas chief executive Patrick Allman-Ward said.
The construction work on the project was put on hold due to the Covid-19 pandemic. Capacity expansion is set to be completed by April, 2023 following an agreement with the Kurdish Regional Government and the companies.
Gas production by the Pearl Consortium accounts for more than 80 per cent of Iraqi Kurdistan's electricity generation, the companies said.
Over $2 billion-worth of investments are committed to Dana Gas' Kurdish assets so far. The Khor Mor field produces 440 million cf/d of gas as well as 15,7000 barrels per day of condensate and 1,020 tonnes of liquefied petroleum gas. Condensate refers to a liquid associated with gas production that fetches a high price in the energy markets.
The consortium plans to add another gas processing train with 500 cubic cf/d of capacity, which will raise production to nearly 1 billion cf/d by 2024.
The fresh injection of capital would help grow gas production by "almost 60 per cent within two years from now, supporting the local electricity provision even further", said Crescent Petroleum chief executive and Dana Gas board managing director Majid Jafar.
In February, Dana Gas said it was in discussions to secure a $250m loan from the Development Finance Corporation to expand its gas production activities in the Kurdistan Region of Iraq.
Proceeds will be used to develop the Khor Mor field.
On Sunday, the company terminated a $236m deal to sell its Egyptian assets to exploration and production company IPR Wastani Petroleum.
The Dana Gas board has decided to retain and operate assets in Egypt alongside the offshore Block 6.