• Natural Gas News

    Explosion incident halts Dana's Kurdistan project


The suspension adds to the turmoil that has engulfed Kurdistan's independent oil and gas policy.

by: Callum Cyrus

Posted in:

Natural Gas & LNG News, Middle East, News By Country, United Arab Emirates

Explosion incident halts Dana's Kurdistan project

Dana Gas said June 27 it had temporarily suspended its expansion of the Khor Mor gas and condensate project in Kurdistan, after three small rockets landed and detonated in the area.

The suspension of expansion work at the Khor Mor Block, in Kurdistan's Sulaimani region, will not affect production flow. A rocket was fired into the area on June 22, and two further rockets that landed on June 25 and 26. Observers believe Iran-linked militias mounted the attacks, though no group has officially taken responsibility. 

Khor Mor is being expanded to more than double its gas production capacity to above 700mn ft3/d by April 2023, from around 450mn ft3/d at present. While no one was hurt by the strike, the suspension will come as a blow to Dana Gas and its project partner Crescent Petroleum, hindering efforts to escalate gas output, following record yields from Kurdistan last year.

Kurdistan Regional Government's prime minister Masrour Barzani on June 26 said Erbil would intensify the security detail around Khor Mor's production facility, while expressing his concern about the missile strikes.

The barrage of missiles fired into Kurdistan has increased in recent months, putting oil and gas production at risk at a time when relations between the KRG administration and Baghdad are souring.

Kurdistan in 2007 carved an independent path to exporting its massive oil and gas resource with the launch of its own industry laws. The KRG oil and gas framework has induced sizeable investment inflows by IOCs, thanks largely to lucrative production-sharing terms and the promise of watertight operating environments.

Erbil's grand plans are in danger of being derailed, as Baghdad wants more central control of KRG's oil and gas resources. Iraq's highest ranking court struck down the KRG framework in February, demanding Kurdish oil and gas assets be handed over to the central government. While Erbil has so far ignored the directive, Baghdad's efforts to claim control of assets on Kurdish territory are becoming increasingly aggressive. On May 12, for example, Iraq's national oil company stated that KRG had no authority to issue oil and gas tenders to overseas companies.

Kurdistan produced 474,000 barrels/day of oil in April, down from a peak of almost 600,000 b/d in late 2017, according to S&P Global Commodity Insights. Reuters reported May 19 that Baghdad had sought to force IOCs to sign new contracts with its state-owned oil and gas marketing company, SOMO, rather than dealing with the KRG administration. The attempt to enforce February's federal court ruling saw international law firms hired by Baghdad approach IOCs operating in KRG territory, aiming to bring their "operations in line with applicable Iraqi law".