Iraq’s Kurdistan Regional Government (KRG) agreed to a settlement with Dana Gas and partners in a protracted dispute over natural gas projects, which will see KRG immediately pay US$1 billion.
KRG will pay Pearl Petroleum partners, which include Dana Gas and Crescent Petroleum, $600 million, as well as $400 million to invest in further development to boost production, Dana Gas said in a statement.
As part of the settlement agreement, Pearl will increase gas production at Khor Mor by 500 MMscf per day, or 160 per cent from current levels. This is expected to begin in approximately two years.
Pearl has claimed damages against KRG in October 2013 to an arbitral tribunal in London - the tribunal had awarded the former $2.239 billion to date. After the $1 billion payment, the remainder of $1.239 billion will be reclassified as cost recoverable by Pearl from future revenues generated from the Khor Mor and Chemchemal fields, Dana Gas said.
After recovery of cost, the split of the revenues from the fields will be 78 per cent for KRG and 22 per cent for Pearl. The contract for the fields has been extended to 2049.
“The settlement of all debts and restoration of full cooperation gives a positive outlook for further investment and full realization of the enormous resource potential of the areas,” said Majid Jafar, CEO of Crescent Petroleum and managing director of the board of Dana Gas.
Other partners in the Pearl Petroleum consortium include Austria’s OMV AG, Hungarian energy group Mol Nyrt and Germany’s RWE AG.