ABU DHABI- Pearl Petroleum, majority-owned by UAE's Dana Gas and its affiliate Crescent, has signed a 10-year gas sales agreement (GSA) with the Kurdistan Regional Government (KRG).
Under the deal, Pearl will sell an estimated 80 million cubic feet per day of additional gas it plans to produce later this year from the Khor Mor field, a statement from Dana Gas said on Wednesday. The current level is 305 million cubic feet per day.
In August last year, Pearl agreed a final settlement with the KRG, receiving $1 billion in cash with plans to expand operations at the Khor Mor and Chemchemal fields, as well as installing additional gas processing and liquids extraction facilities. "The gas sales agreement marks an important milestone..... which will see a further investment of over $600 million over the coming few years and a more than doubling of production," Majid Jafar said in the statement.
The initial phase of the expansion will involve Pearl increasing daily production of natural gas and condensates from the Khor Mor Field by around 25 percent later this year, which will deliver gas to fuel additional affordable power generation to Iraq.
The next step involves increasing gas output by a further 125 percent within two years after that to 900 million cubic feet per day of gas production, together with associated liquids.
As part of the Pearl Petroleum consortium, which includes Austria's OMV, Hungary's MOL and Germany's RWE, Dana started a case in 2013 against the KRG in the London Court of Arbitration, accusing it of underpaying for gas liquid production.
The company and its partners reached a financial settlement last August by which the Kurdish government agreed to pay $600 million immediately to the consortium, and $400 million to invest in the development of the region.
(Reporting by Stanley Carvalho, editing by Louise Heavens) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: email@example.com))