Taqa, as the company is known, plans to invest US$300 million to develop three wells in the first phase of development of the Atrush block, near the Kurdish capital of Erbil.
The first phase of development is expected to yield 30,000 barrels per day (bpd) starting in 2015, the company said.
“The Kurdistan region of Iraq is an exciting exploration frontier and has tremendous potential,” said David Cook, Taqa’s head of oil and gas. “It is our ambition to build an integrated business in the Kurdistan region of Iraq including potential power and water projects in addition to oil and gas infrastructure developments.”
The approval from the semi-autonomous government comes as other foreign investors operating in the Kurdish region race to build a pipeline allowing the region to export oil without supervision from Baghdad, which asserts that the oil contracts signed by the Kurdish government are illegal.
Genel Energy, the Turkish explorer headed by the former BP chief Tony Hayward, is completing the last leg of a pipeline linking the Taq Taq field to Turkey.
The pipeline has the potential to change the fortunes of local investors, who have had to weather dips in revenue when payments have been delayed, as well as affecting negotiations between Erbil and Baghdad over revenue-sharing and export flows.
Yesterday shares of Taqa, which is majority-owned by the Abu Dhabi Government, dipped slightly to Dh1.28 each on the Abu Dhabi bourse.
Along with junior partners Canada’s ShaMaran and Marathon of the United States, Taqa is considering the possibility of producing natural gas alongside oil for domestic consumption.
After the first phase the partners hope to double production with a second facility.