Dana Gas wants to increase investment in the Kurdish region of Iraq to expand production.
The Sharjah-based fuel company is now in talks with the Kurdistan Regional Government (KRG). Dana and its partners at Khor Mor pump 80,000 barrels of oil equivalent per day and have invested more than US$1.1 billion, the largest investment by a foreign company in oil and gas in the semi-autonomous region to date.
As of last month, the government owed Dana Gas $430 million in unpaid invoices for fuel, according to the company.
“We are working with the ministry to resolve all outstanding matters, including receivables, amicably and in good faith,” said Patrick Allman-Ward, the chief executive of Dana Gas. “We are also in discussion with them on further expansion of our investment and production, with the correct assurances and under the contractual terms.”
A long-running dispute between the regional government in Erbil and the federal authorities in Baghdad over the validity of the Kurdish contracts has held up revenue-sharing and oil exports, hitting the bottom line of operators in the Kurdish region. Other UAE operators in the Kurdish region include Abu Dhabi National Energy, or Taqa, and DNO International, the Norwegian company part-owned by RAK Petroleum.
The Kurdish ministry of oil claims the amount Dana says it is owed is incorrect, according to media reports.
“The KRG does not owe Dana Gas the sum referenced or any other sum, and the statement that the sums are ‘overdue’ from the KRG is inaccurate and misleading to investors,” Ashti Hawrami, the Kurdish minister of natural resources, wrote in a letter to the managing director of the board of Dana Gas, according to the local online newspaper Rudaw.
“The ongoing breaches of the commitments owed by Dana Gas and its affiliates to the KRG have resulted in significant (and increasing) damage to the KRG.”
Dana Gas defended its invoice claims in a statement on the Abu Dhabi bourse.
“Dana Gas stands by the statements the company has made on the significant amount of unpaid invoices owed to it and its partners by the KRG ministry of natural resources [MNR] in respect of their operations in Iraq’s Kurdistan region,” the company wrote in the filing.
“These statements are consistent with the regular updates that have been provided by Dana Gas as part of its quarterly reporting requirements as a publicly listed company, and have been known by the MNR and its various stakeholders for the past five years.”
Dana shares remained unchanged at 64 fils yesterday.
Dana has produced fuel in the Kurdish region for five years, including 335 million cubic feet of gas per day and 14,100 barrels of condensate. Since the start of production in October 2008, Dana and its partners have pumped more than 402 billion cubic feet of gas and 20 million barrels equivalent of liquids, allowing the Kurdish region to add on 1,750 megawatts of power plant capacity.
“We are proud to be the largest investors in the Kurdistan region’s oil and gas sector, and the highest petroleum producers since our first production five years ago, which enables electricity supply for millions of citizens, transforming the development of the region and providing billions of dollars of ongoing fuel savings for the Kurdistan Regional Government,” said Majid Jafar, the managing director of the Dana Gas board.