Dana Gas is making progress at its gas projects in Kurdistan but is coming under pressure from the high-level dispute between the region and the central government.
Iraq’s Ministry of Oil reported earlier this week that it had completed a transmission line, from the Khor Mor fields to the Kirkuk power plant. The link is only 1 km long, but against the backdrop of the tense political relationship, sparks are already flying.
Kurdistan’s Ministry of Natural Resources has warned Dana Gas against using the pipeline without local approval.
The company is “not allowed to transport gas from Kurdistan Regional Government (KRG) fields to any other place without the approval” of the KRG, the statement said on November 6.
The ruling Kurdistan Democratic Party (KDP) alleged that the Patriotic Union of Kurdistan (PUK), which holds power around the gas field, must have approved the plan. Speaking to VOA, a PUK official denied the suggestion. “This issue is related to the [KRG]”, the official told the news agency.
Khor Mor has capacity of around 500 million cubic feet per day of gas. Dana Gas is working on an expansion plan, KM250, to add another 250 mmcf per day of output, at a cost of $806 million. The company aims to reach first gas in April 2024.
Dana Gas has not responded to comment about a gas supply agreement with the Kirkuk facility.
The 1,050-metre pipeline to the Kirkuk plant can carry 100 mmcf per day.
Dana has said its gas fields in Kurdistan “could be the biggest gas fields in the whole of Iraq”.
The Kirkuk province is disputed. Kurdistan held de facto control of the region from 2014 to 2017, at which point the central government took control. The province is due to hold local elections in December, which could see these tensions play out, with a risk of Turkish or Iranian involvement.
Export dispute
Baghdad took control of the export pipeline running from Kurdistan to Turkey earlier this year. As a result, the central government now holds the purse strings. Kurdistan is agitating for Baghdad to send more cash and faster.
KRG Prime Minister Masrour Barzani asked the Iraqi government for 700 billion dinars ($535mn) per month in a letter this week. Local oil producers in Kurdistan have said that without payment for their production, volumes will remain shut-in.
Dana Gas, given its position supplying to the local market, has been largely immune from the export pipeline shutdown. The company said it was a steadfast support of Kurdistan’s gas demand. Completing the KM250 expansion should add at least $150mn to its annual revenue, it said this morning.