Pearl Petroleum, a consortium led by Sharjah-based Crescent Petroleum and Dana Gas that operates in Iraq's Kurdistan, has signed a 10-year gas sale agreement with the regional government to supply and sell additional gas quantities that are to be produced this year.
The consortium is expected to boost delivered gas output from the Khor Mor Field by 80 million cubic feet of sales gas per day before the end of 2018 from the current level of 305 million cubic feet per day, Abu Dhabi-listed Dana said in a statement on Wednesday.
The deal builds on improved ties with the Kurdistan Regional Government, which signed a $1 billion settlement agreement with the consortium last year, helping Dana Gas boost its 2017 profit. Under the terms of the settlement, the KRG agreed to pay the Pearl Consortium - consisting of Dana Gas, its parent Crescent Petroleum, OMV of Austria, Germany’s RWE and Hungary’s MOL - a sum of $600 million, together with a $400m payment to be allocated towards the consortium’s further investment in the region’s gasfields.
“The gas sales agreement marks an important milestone in our tenth year 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,” said Majid Jafar, chief executive of Crescent Petroleum and managing director of Dana Gas board.
The consortium plans to increase gas production by a further 125 per cent within 2 years to reach around 900 million cubic feet per day of gas production, in addition to associated liquids. Dana Gas’ appraisal programme has resulted in proven certified reserves of 15 trillion cubic feet of gas and 310 million barrels of condensate, a light oil that is pumped with gas.
“Despite all the challenges we 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 as a whole,” said Patrick Allman-Ward, chief executive of Dana Gas.