UK court orders Kurdish government to pay Dana Gas $100 million in 14 days
The London High Court has ruled that the Kurdistan Regional Government (KRG) in Iraq has two weeks to pay US$100 million in arrears to Sharjah-based Dana Gas and its partners.
Dana shares rose about 5 per cent on Sunday following news of the ruling.
The High Court upheld the London Court of International Arbitration’s ruling last year that ordered the KRG to pay Dana Gas and its partners, Crescent Petroleum and Pearl Petroleum, outstanding sums for the development of hydrocarbon assets in the region.
It is the latest twist in the long-running legal battle and hinged on whether the KRG could claim immunity to international arbitration. That was rejected by Mr Justice Burton.
The KRG hit back on Sunday, accusing Dana Gas of maintaining an “aggressive stance”. The KRG said: “Dana was fully aware of KRG’s financial difficulties and its need to maintain its effective fight against ISIS terrorism and support for the more than 1.8 million refugees and internally displaced persons in the Kurdistan Region. 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.” Dana Gas declined to comment.
The KRG said the High Court decision would not have an effect on its existing counterclaims against Dana Gas.
“Those counterclaims have now been partially and provisionally quantified by the KRG’s experts at more than $3 billion,” it said.
Dana Gas signed a heads of agreement in 2007 to explore and develop the Khor Mor and Chemchemal gas fields. The supplies from these assets are to provide domestic electric power to plants near Erbil and Suleymania with further development of the gas reserves planned for export. A heads of agreement is a non-binding document outlining the main issues relevant to a tentative agreement.
The total investment of the Khor Mor gas field exceeds $900m, while the first appraisal work programme in Chemchemal was priced at about $75m, according to Crescent Petroleum.
However, payment disputes have soured relations between the partners and the government for six years.Problems arose in 2009 when the consortium claimed that the KRG underpaid for hydrocarbon assets.
Dana Gas is having difficulties getting payments from the KRG and Egypt that exceeded $1bn by the end of the third quarter. The payment disputes have weighed on its earnings. Last week it reported a $9m loss for the third quarter.
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Updated: November 22, 2015 04:00 AM