Dana Gas has launched arbitration proceedings against the government of the Kurdish region of Iraq as it seeks US$430 million in unpaid invoices.
That is the latest escalation in a rapidly widening rift between the Sharjah-based fuel producer and the Kurdistan Regional Government (KRG).
In a statement yesterday to the Abu Dhabi bourse, Dana Gas said it wanted to seek clarification of the long-term contractual rights of its sister firm Crescent Petroleum and itself regarding the development and marketing of the Khor Mor and Chemchemal gasfields, as well as the amount owed by the KRG.
“This follows concerted and sincere efforts to resolve differences of opinion with the MNR [ministry of natural resources] including a formal mediation procedure … which the MNR unfortunately declined to engage,” the statement said.
Ashti Hawrami, the Kurdish minister of natural resources, this month refuted Dana’s invoice claims in a letter to Majid Jafar, the managing director of Dana Gas’s board, according to the local online newspaper Rudaw.
“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,” Mr Hawrami said.
Dana Gas shares on the Abu Dhabi bourse dipped 1.49 per cent to 66 fils yesterday morning.
The company said that it hoped the matter would be resolved “amicably and in good faith, in the shortest possible time, in order to enable full and proper development of the fields”.
The fuel producer and Crescent Petroleum were among the first to secure an exploration concession with the KRG in Erbil in 2007. Although energy companies have revelled in the ease of finding oil and gas in rich, undeveloped reservoirs, getting paid for it is more complicated.
Iraq’s federal government in Baghdad asserts the Kurdish contracts are illegal because they allow companies to book reserves, violating a clause in the Iraqi constitution that states the country’s natural resource must remain in the hands of citizens.
Oil producers such as DNO International and Genel Energy have sought to earn income by exporting output themselves, including using an independent pipeline to Turkey that is due to turn operational by the end of the year.
Meanwhile, plans for Nabucco-West, a long-awaited gas pipeline connecting Azerbaijan to Vienna via the Kurdish region, collapsed this year.