Heritage Shareholders Loss is Europe's Gain?
This past Wednesday, U.K.-listed oil explorer Heritage Oil said it has discovered the largest gas field in Iraq for 30 years.
"We are considering various development options including a tie-in to planned infrastructure that will achieve first production for both oil and gas in 2015," the company said.
Investors in Heritage however had been hoping for oil and expressed their lack of enthusiasm by selling off the company’s shares.
Though investors may not be impressed, the discovery of 6.8- and 9.1-trillion cubic feet (approximately 192-257 billion cubic meters) of natural gas in the Miran area west of Suleimaniya, the discovery is good news for EU and the Nabucco pipeline consortium.
“Nabucco welcomes the news of a major discovery at the Miran gas field in the Kurdistan region of Iraq. The shareholders are in negotiations with potential suppliers and this will be considered a further advantage for Nabucco,” said Christian Dolezal, a spokesman for the Nabucco consortium.
Some members of the Nabucco consortium are already directly active in Kurdistan. The lead member of Nabucco, Austrian oil and gas company OMV, has stakes in several gas discoveries there and continues to explore.
“The Kurdish Region of Iraq offers world class opportunities for oil and gas exploration and has huge untapped reserves rivaled by very few places in the world,” OMV says on its website.
Kurdistan has pledged gas supplies to Europe. Speaking at the Black Sea Energy and Economic Forum last October, Ashti Hawrami, the natural resources minister of the Kurdistan Regional Government (KRG), said fields in northern Iraq were “more than adequate for internal use, the domestic supply of Turkey as well as to satisfy the requirements of Nabucco. We are confident, if we can prove the full 200 tcf, we can supply the entire needs of Nabucco.”
However, the Kurdish regional administration and the central government in Baghdad must first resolve their on-going dispute.
Energy exports from the KRG have been hindered by disputes between the Kurdish government and the central government in Baghdad for years as the two parties have been unable to resolve their disputes, thus blocking the passage of necessary legislation on hydrocarbon development and revenue sharing.
In August 2010, Nabucco consortium partner RWE Supply & Trading signed a cooperation deal with the Kurds “to develop and design its domestic and export gas transportation infrastructure — creating a route to market for Kurdistan’s major gas reserves.” However Iraq called the agreement “illegal.”
Dana Gas and Crescent Petroleum, co-owners of the Kormor gas field, the first gas field discovered in Kurdistan, have already been in negotiations with Nabucco companies over selling Kurdistan gas to the pipeline.
Though challenges remain, the Heritage discovery is it still a boost to moving towards lowering Europe's dependence on Russia's gas supplies.