UAE-Led Dana Gas Consortium Signs $ 250 Million Funding Agreement
Sharjah: Pearl Petroleum Company, the consortium led by Dana Gas and Crescent Petroleum of the United Arab Emirates, signed a $ 250 million financing agreement with the US International Development Finance Corporation (DFC) to support gas expansion work currently underway on the Khor Mor gas plant in the Kurdistan region of Iraq (KRI).
DFC is the development finance arm of the United States government and the proceeds from DFC’s 7-year financing will support a 50 percent increase in gas production capacity to 690 million standard cubic feet (scf) / day to meet the growing demand for clean natural gas for power generation and industry in the KRI.
The total cost of the project is $ 630 million and the remaining financing has already been secured through a regional bank facility and the EPC contractor.
“This funding agreement with DFC underscores the importance of developing natural gas resources in the KRI to support the region’s economic development and growth. Despite the global challenges presented by the COVID pandemic, we have continued to maintain our record of uninterrupted operations and have even managed to increase production. The DFC agreement is a testament to our success and highlights the potential of these resources and the bright future of KRI, ”said Majid Jafar, CEO of Crescent Petroleum and Managing Director of the Board of Directors of Dana Gas.
Higher gas production
The KM-250 project is the first step of a two-train expansion project at Khor Mor which aims to increase total production capacity to approach 1 billion scf / day. Work resumed in April 2021 after on-site construction stopped last year due to the COVID pandemic and is currently nearing completion by April 2023.
Pearl Petroleum’s total investment in Khor Mor to date exceeds $ 2.1 billion with a cumulative total production of over 341 million barrels of oil equivalent (boe) of natural gas and liquids. The uninterrupted supply of gas to the Erbil, Chemchemal and Bazian power plants has resulted in significant fuel savings and economic benefits for the Kurdistan region and Iraq as a whole.
“Together with our partners at Pearl Petroleum, we are proud to further develop the gas sector in the Kurdistan region of Iraq, provide an increased supply of cleaner energy and support local economic development. This agreement underscores our continued confidence in the region and its long-term prospects, ”said Dr Patrick Allman-Ward, CEO of Dana Gas.
The gas produced to date has reduced emissions by 42 million tonnes of CO2 by replacing diesel in power generation in the KRI, thus making a major contribution to reducing greenhouse gas emissions and local air pollution in the region, as well as supporting the transition to better sources of energy to tackle global climate change.
Between 2018 and 2021, the Khor Mor gas plant also benefited from a 45% increase in production thanks to an optimization of the installation bringing the current total production to 106,000 barrels of oil equivalent per day (bepd). The project is today the largest regional private sector upstream gas operation in Iraq.
“DFC’s investment in the expansion of Khor Mor will dramatically increase energy access for people across the Kurdistan region of Iraq. This highly scalable project represents the continued investment of the United States in KRI, ”said Dev Jagadesan, Interim CEO of DFC.
In April 2007, Dana Gas and Crescent Petroleum entered into an agreement with the KRG for the exclusive rights to evaluate, develop, produce, market and sell oil from the Khor Mor and Chemchemal fields in the IRK. Production at a newly built factory in Khor Mor began just 15 months later, in October 2008, an industry record. In 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as majority shareholders, and with OMV, MOL and RWE subsequently joining the consortium with a 10 percent share each.