Further blow to KRG over Dana Gas case - 30 Nov 2015
The Kurdistan Regional Government (KRG) has been ordered to pay the UAE’s Dana Gas and its partners $1.98 billion by a UK court in a dispute over development rights for two oil and natural gas fields.
The London Court of International Arbitration has given the KRG a 28-day deadline to pay Dana Gas, Crescent Petroleum and Pearl Petroleum for condensate and liquefied petroleum gas produced until 30 June.
Dana Gas announced the ruling on the Abu Dhabi Stock Exchange.
“This award is final, binding and internationally enforceable, and does not depend upon any further hearings or claims and counter-claims by the parties,” according to the statement from Dana Gas. It is also based on a pricing mechanism determined previously by the tribunal it added.
But the KRG has refuted the statement, saying that it is “misleading and incomplete”.
“This is a partial award that does not finally determine all issues in the arbitration and leaves many issues unresolved. The arbitral tribunal has neither heard nor decided the KRG’s counterclaims,” read the statement from the KRG. These counterclaims against Dana Gas have been estimated to cost upwards of $3 billion.
The ruling follows an earlier decision by the UK’s High Court, which ordered the KRG to pay $100m in arrears to Dana Gas.
In 2007, Dana Gas signed a non-binding agreement to explore and develop the Khor Mor and Chamchamal gas fields to provide domestic power to plants in Erbil and Suleimaniyah with the potential to export outside of the region.
Dana Gas claims the KRG had given it exclusive rights to develop the fields for no fewer than 25 years, but the KRG has disputed this since May 2009.
Crescent Petroleum has said it invested $900 million in the Khor Mor field, with $75 million invested in Chamchamal. Disputes between the two parties began in 2009 when Dana Gas accused the KRG of underpaying for its hydrocarbon assets.
The KRG seems unlikely to back down amid these court cases, further straining the relationship between the two parties.
Separately, the KRG is planning to export natural gas to Turkey and the rest of Europe by 2017.
Gas reserves in the three Kurdish provinces are estimated at more than 5.7 trillion cubic feet, 80 per cent of which is in the Suleimaniyah province alone. This figure rises to almost 8 trillion cubic feet in reserves if the disputed areas of Kirkuk are taken into account.
“Kurdish gas will reach Europe via Turkey. The Kurdish region can fill the gap created by Russia’s gas cut off to Europe,” said Cevdet Circo, head of the KRG’s parliamentary committee for industry and energy, speaking to Anadolu Agency.
Iraq Energy Institute