UK court orders KRG to pay $100m to Dana Gas - 23 Nov 2015


The Kurdistan Regional Government (KRG) has been ordered by a UK court to pay the UAE’s Dana Gas $100 million in arrears.

 

The UK’s High Court upheld a ruling passed by the London Court of International Arbitration in December last year and gave the KRG a two-week deadline on 22 November 2015 to pay Dana Gas and its partners – Crescent Petroleum and Pearl Petroleum.

 

Dana Gas had filed the case after failing to receive payments for its hydrocarbon investments in the Kurdistan Region. 

 

The KRG’s Ministry of Natural Resources (MNR) claims that Dana Gas had failed to honour its obligations and accused the company of employing an “aggressive stance” while the Region faced financial turmoil as it dealt with the influx of refugees and internally displaced people amid the fight against the Islamic State of Iraq and the Levant (ISIL). 

 

“Regrettably, rather than working constructively with the KRG to find a way forward in the light of the prevailing circumstances as other international oil companies have done, Dana maintained its aggressive stance and pursued its application to the court,” the ministry said in a statement.  “The KRG will continue vigorously to pursue its claims for damages and other relief against the claimants in all appropriate fora.”

 

The KRG is pursuing counter-claims against Dana Gas, at an estimated cost of more than $3 billion.

 

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. 

 

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 relationship between the two has remained sour with many claiming that Dana Gas has burnt its bridges in the KRG.

 

In September this year, the MNR allocated $75 million to repay the international oil companies operating in the region. The beneficiaries have included DNO, Gulf Keystone Petroleum and Genel Energy. 

 

Last month, the KRG exported almost 18.5 million barrels of oil, an average of 595,500 barrels per day (bpd) through the Ceyhan pipeline. The KRG-operated fields delivered 13.6 million barrels while the fields operated by the North Oil Company (NOC) contribution 4.85 million barrels. The pipeline faced three days of downtime due to sabotage and theft. 

 

The KRG is hoping to move away from trucking as it develops the infrastructure to move oil and refined products via an enhanced pipeline network

 

In a report recently published by the MRN on truck moving oil by trucks, the KRG revealed it undertakes 5370 road journeys each day, of which 3745 are carried out by domestic fuel tankers and the remainder by international tankers. 

 

“MNR estimates that with improvements to the Region’s oil transport infrastructure and the transition of the Region’s power stations to run on piped natural gas instead of trucked diesel, the number of daily tanker journeys will fall to 1641 journeys by the first quarter of 2018.”

 


Iraq Energy Institute