Dana Gas expects to generate up to $200 million (Dh733m) in revenues following its latest gas sales agreement with the Kurdistan Regional Government, as it looks to add more capacity to its assets in the region.
“The financial impact of this expansion is directly related to the oil price," Dana Gas chief executive Patrick Allman-Ward said on Monday in a disclosure to the Abu Dhabi Securities Exchange, where its shares are traded. "With the oil price ranging between $60 and $70 per barrel, we expect the new phase of expansion to add $175m to $200m to Dana Gas share of revenues and project’s cash flows per annum.”
Dana Gas, based in Sharjah, and Crescent Petroleum, its partner in the Pearl Consortium, operate the Khor Mor and Chemchemal fields in the Kurdish region of Iraq. The partners announced the intention to invest $700m as part of a sales agreement and expansion for the gas assets. As part of the 20-year gas sales agreement with the KRG, the two parties will boost gas production by 63 per cent, or 250 million standard cubic feet per day, to 650 million scf/d by 2021, and later to 900 million scf/d by 2022. Production of condensate from the assets is expected to reach 35,000 bpd by 2022.
The financial impact of the transaction would come into effect after the construction of new capacity and addition of incremental production in 2021, Mr Allman-Ward said.
In 2017, the consortium agreed with the KRG to settle past receivables and vowed to continue investing in the region, particularly in the Khor Mor and Chemchemal fields, through the addition of gas processing and liquid extraction facilities.
Total investment in the Kurdish gas scheme has exceeded $1.6bn, with total cumulative production of over 260 million barrels of oil equivalent.