Dana Gas


OMV Pockets $107m from KRG Settlement

By John Lee.

Austria’s OMV has said its third-quarter clean operating result “was positively impacted” by about 90 million euro ($107 million) following a settlement over a dispute relating to the Khor Mor and Chemchemal fields in Iraqi Kurdistan.

On August 30, 2017, the Kurdistan Regional Government (KRG) and Dana Gas , Crescent Petroleum and Pearl Petroleum Company Limited reached a settlement under which the KRG agreed to immediately pay $1 billion to the consortium to settle the long-running legal dispute.

Of the EUR 90 million, OMV received approximately 60 percent as dividend from Pearl while around 40 percent was put into a dedicated accountfor future investments in Khor Mor.

(Source: OMV)

Crescent Petroleum, Dana Gas support Healthcare Centre for IDPs

By Robert Cole, AMAR Foundation.

Crescent Petroleum, one of the Middle East’s oldest and largest upstream oil companies, and Dana Gas, one of the largest private sector natural gas companies in the region, have joined forces to fund the running costs of a healthcare centre and vocational training centre for displaced people in the Kurdistan Region of Iraq for the next three years, the two companies today announced.

The three-year commitment will fund the entire running costs of AMAR International Charitable Foundation’s Primary Healthcare Centre and vocational training centre in Khanke Camp, which serve the whole community, including 16,000 Yazidi residents.

The healthcare centre plays a vital role in providing healthcare to those who would otherwise be unable to access medical support. In the second quarter of 2017, the clinic saw 26,404 cases, conducting 5,411 maternal health consultations and 2,034 child consultations.

Commenting on the donation, Crescent Petroleum’s CEO Majid Jafar said:

“At Crescent Petroleum, we aim to empower local communities by not only providing energy solutions to fuel their development, but also by responding to their social and economic needs. Internally displaced people (IDPs) are among the world’s most vulnerable populations but they are often overlooked by international relief efforts, and we are committed and honoured to assist their healthcare needs in partnership with AMAR Foundation.”

The natural gas produced by the companies from the Khor Mor field supplies more than 1,750 MW of affordable electricity to the Kurdistan Region, giving schools, hospitals and other vital entities a non-disruptive water and electricity supply for millions of people.

The Duhok Health Directorate has seen the population of the region more than double over the last two and a half years due to the massive influx of IDPs from the Sinjar and Mosul regions, putting increasing pressure on healthcare access.

Patrick Allman-Ward, Dana Gas’ CEO, said:

“Our corporate social responsibility programme has been at the heart of Dana Gas’ operations since its inception in 2005. Providing financial support to those in need is not only a moral obligation, it also has a positive impact on the communities where we operate.”

AMAR’s Chairman and Founder, the British Conservative Peer, Baroness Nicholson of Winterbourne, said she was “overwhelmed” by the generosity of Dana Gas and Crescent Petroleum:

“AMAR builds, staffs and runs five state-of-the-art heath centres on an extremely low budget. The generous donation from Crescent Petroleum and Dana Gas means we can continue with the marvellous work being done in Khanke by our locally trained doctors and nurses for the next three years.”

PLEASE CLICK HERE IF YOU CAN HELP – ANY AMOUNT LARGE OR SMALL.

(Source: AMAR Foundation)

KRG to pay $1bn to Pearl in “Full and Final Settlement”

The Kurdistan Regional Government (KRG) will immediately pay $1 billion to the Pearl Consortium, including Dana Gas, and its partners to settle a long-running legal dispute.

In a joint press release, the Kurdistan Regional Government and Pearl Consortium announced the “full and final settlement” between the two parties.

Below is the full press release:

Settlement Agreement between Kurdistan Regional Government of Iraq (the “KRG”) and (i) Dana Gas PJSC; (ii) Crescent Petroleum Company International Limited; and (iii) Pearl Petroleum Company Limited (“Pearl”); together (the “Consortium”)

The KRG and the Consortium, together (the “Parties”), signed a Heads of Agreement onc and Chemchemal fields on 4 April 2007 (the “HoA”). Subsequently a dispute arose between them concerning certain matters under the HoA, and they referred this disputeon 21 October 2013 to an arbitration under LCIA case reference number 132527 (the “Arbitration”) for decision by an arbitral tribunal (the “Tribunal”) in London.

The Parties have mutually agreed to fully and finally settle all their differences amicably by terminating the Arbitration and related court proceedings, and releasing all remaining claims between them, including the substantial damages asserted by the Consortium against the KRG; implementing a mechanism for settlement of $2,239 million awarded by the Tribunal to date ; and proceeding with immediate further development of the HoA’s world class resources for mutual benefit as well as the benefit of the people of the Kurdistan Region and all of Iraq.

The agreed settlement highlights are as follows:

  • The KRG will immediately pay Pearl a sum of US$600 million.
  • The KRG will also immediately pay Pearl a further US$400 million to be dedicated for investment exclusively for the aforesaid further development to substantially increase production.
  • Pearl will increase gas production at Khor Mor by 500 MMscf/day, a 160% increase on the current level of production (the “Additional Gas”). The Additional Gas, together with significant additional amounts of condensate, is expected to begin production in approximately two years.
  • The balance of sums awarded by the Tribunal ($1,239 million) is no longer a debt owed by the KRG and will be reclassified as outstanding cost recoverable by Pearl from future revenues generated from the HoA areas.
  • The profit share allocated to Pearl from future revenues generated from the HoA areas are adjusted upwards to a level similar to the overall profit levels normally offered to IOCs under the KRG’s Production Sharing Contracts. This adjustment reflects the larger investment risks and costs involved in the development of natural gas resources compared to oil developments. After the recovery of costs and a return on investment by the Consortium, 78% of revenues generated from the HoA areas will be for the account of the KRG, and 22% for the account of Pearl.
  • The Parties have clarified the Khor Mor block boundary coordinates and the KRG has awarded the Consortium investment opportunities in the adjacent blocks 19 and 20, and added these to the HoA areas, with commitments by the Consortium to make appraisal investments on these blocks, and developments if commercial oil and gas resources are found.
  • The KRG will purchase 50% of the Additional Gas on agreed terms to boost the gas supply to power generation plants in the Kurdistan Region. The other 50% of the Additional Gas (250 mmscf/d) will be marketed and sold by Pearl to customers within Iraq or by export, or can be sold to the KRG as well to further boost power generation within Iraq.
  • Pearl will also expand its local training and employment programs towards achieving maximum localization and content, as well as supporting local communities through its active Corporate Social Responsibility (CSR) programmes.
  • The Parties have exchanged mutual releases, waivers, and discharges in relation to all claims in relation to the Arbitration and related court proceedings.
  • The Parties have also amended and clarified the HoA language and terms, including extension of the term of the contract until 2049.

The Parties are very pleased with their settlement and and look forward to working together to maximise the full potential of the HoA areas, for their mutual benefit as well as that of the people of the Kurdistan Region and all of Iraq.

Under the settlement, the people of the Kurdistan Region and Iraq will enjoy additional revenues and improved electricity supply. The Parties believe that this settlement agreement confirms to international investors that the Kurdistan Region of Iraq offers an attractive and secure environment for investment.

H.E. Dr. Ashti Hawrami, Minister of Natural Resources of the KRG, said:

“The companies’ investment and production to date has already delivered substantial benefits for the Kurdistan Region through enabling cost-effective power generation. We are delighted by the outcome of this settlement which opens a new chapter in the relationship between the parties and will take the development of the important natural gas sector to new heights.”

Mr. Majid Jafar, CEO of Crescent Petroleum and Managing Director of the Board of Dana Gas PJSC, added:

“We have always expressed our commitment to amicable resolution of matters to enable proper development of the Khor Mor and Chemchemal fields. We are pleased with this definitive agreement which follows constructive dialogue with the KRG and promises to generate significant value for all concerned. 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 HoA areas.”

(Sources: KRG, Dana Gas)

KRG hits back at Dana Gas

The Kurdistan Regional Government (KRG) issued a statement regarding the partial ruling on the allocation of costs from the tribunal in the ongoing arbitration between the KRG and Dana Gas PJSC, Crescent Petroleum Company International Limited and Pearl Petroleum Company Limited (collectively “the Claimants”):

The arbitration is subject to duties of confidentiality under the applicable law and arbitration rules. Without waiving these duties of confidentiality, the KRG is obliged to correct certain public statements by Dana Gas, which quote selectively from the ruling and create an impression that is materially misleading and incomplete. In particular, the Claimants’ public statement fails to mention that:

  1. The tribunal’s ruling is only a partial ruling on some costs issues in the arbitration and is not a final determination on all costs issues (or all the other remaining issues) in the arbitration.
  2. The tribunal reduced the legal costs the Claimants had claimed by millions of dollars to reflect the “success of the KRG” in defeating the Claimants’ claim for payments for excess gas, which the Claimants had valued at over US$1.3 billion.  The tribunal held that these claims, on which the KRG succeeded in full, were “in economic terms of considerable importance.”  The Tribunal also held that the discount on their costs offered by the Claimants was “inadequate to reflect the success of the KRG on the excess gas issue.”
  3. The tribunal disallowed further significant legal costs the Claimants had claimed.  The tribunal held that the Claimants had failed to discharge their burden of showing that these costs were properly recoverable.
  4. The tribunal rejected the Claimants’ position that they should be entitled to recover 100% of the fees and costs of the LCIA and the tribunal and, again, reduced the amount awarded to the Claimants to reflect the relative success of the KRG.

The KRG regrets that, once again, the Claimants have sought to make media statements that are selective, misleading and designed to harm the KRG.  The KRG hopes that, going forward, rather than disseminating misleading information in the media for their own purposes, the Claimants will focus their energies on working together with the Government and People of the Kurdistan Region in the best interests of all concerned.

(Source: KRG)

Dana Gas Consortium wins Payment in KRG Dispute

By John Lee.

The London Court of International Arbitration (“Tribunal”) yesterday released its First Partial Final Costs Award, dated 17 July 2017 in the Arbitration between Peal Petroleum Company Limited, Dana Gas PJSC and Crescent Petroleum Company International Limited (the “Consortium”) –v- The Kurdistan Regional Government of Iraq (“KRG”).

The Tribunal ordered the KRG:

  • to pay US$ 14,046,485 to the Consortium within 28 days, together with interest at LIBOR + 2% from the date of the Award; and
  • to bear 85% of the LCIA Arbitration fees and Tribunal’s fees and expenses up to 27 November 2015 amounting to GBP 403,055.97.

The Costs Award relates to the legal costs incurred by the Consortium up to 27 November 2015.  The legal costs incurred in the Arbitration after this date will be the subject of further Costs Awards from the Tribunal in due course.

This additional order of the costs follows the 1st, 2nd and 3rd partial final awards already received on, 2 July 2015, 27 November 2015 and 30 January 2017.

The quantification of the damages for the Delayed Development Claim by the “Consortium” will be determined by the Tribunal at a further hearing scheduled to take place in September 2017.

In a statement, Dana Gas said that it and its consortium partners have invested over US$1.2 billion so far and produced over 150 million barrels equivalent of gas and petroleum liquids, which has had a transformative positive effect on the local economy in the Kurdistan Region and in particular in providing gas to fuel affordable electricity supply.

They reiterate their continued commitment to the KRG and to the people of the Kurdistan Region and all of Iraq, and hope that any outstanding matters with the MNR will be resolved, amicably and in good faith, in the shortest possible time.

(Source: Dana Gas)

Dana Gas claims victory in Kurdistan Dispute

By John Lee.

UAE-based Dana Gas has said it had won a judgment against the Kurdistan Regional Government (KRG) at the London Court of International Arbitration (LCIA).

The consortium of Dana Gas, Crescent Petroleum and Pearl Petroleum has been seeking to confirm its contract rights and obtain payment from the KRG for gas production.

The company said the court has now ordered the KRG to pay $121 million for condensate and LPG.

A statement from the KRG’s Ministry of Natural Resources (MNR) said the tribunal rejected Dana’s claim for over $1.7 billion in respect of so-called excess gas, and its claim that the consortium had lost some $3.3 billion in respect of earn out payments.

More information:

Dana Gas statement

KRG statement (1)

KRG statement (2)

(Sources: Dana Gas, KRG, Reuters)

Dana Gas Kurdistan Production Falls

In its Q1 Financial Report, Dana Gas reports that its production has fallen 16 percent in Iraqi Kurdistan:

KURDISTAN REGION OF IRAQ – RESERVES UPDATE

As reported previously Dana Gas and Crescent Petroleum, joint operators of Pearl Petroleum Company Limited (“PPCL”), estimate that P50 total geologically risked resources of petroleum initially in-place (PIIP) of the Khor Mor and Chemchemal Fields to be 75 Trillion standard cubic feet (Tscf) of wet gas and 7 billion barrels of oil.

PPCL appointed Gaffney Cline Associates (“GCA”), to carry out a certification of the reserves for these fields as at 31st December 2015 based on a comprehensive data set comprising ca. 1200 km 2D seismic, the 11 wells drilled in the two fields to date plus field production data over a period of seven years.

In their report dated April 2016, GCA provided Proved plus Probable (2P) gas and condensate reserves estimates for both fields. For Khor Mor these are 8.5 Tscf and 191 MMbbl and for Chemchemal 6.6 Tscf and 119 MMbbl respectively. Total Dana Gas share of the Khor Mor and Chemchemal 2P reserves is therefore 5.3 Tscf gas and 109 MMbbls condensate, equivalent to 990 MMboe.

GCA’s report confirms Dana Gas’ and Crescent Petroleum’s belief that Khor Mor and Chemchemal have the potential to be the largest gas fields in the KRI and indeed in the whole of Iraq, making them world class assets.

PRODUCTION & DEVELOPMENT PROGRESS

Dana Gas’ share of gross production (35%) in the KRI was 25,500 boepd as compared to 30,400 boepd in Q1 2015. On a retrospective basis, Q1 2015 production on a 35% equity share would be 26,600 boepd. Production has therefore declined by 4% quarter on quarter as LPG train optimisation continues.

Dana Gas ‘Still Waiting’ for $1.98bn from KRG

By John Lee.

Bloomberg reports that Dana Gas PJSC is still waiting for payment of the $1.98 billion that it and two other energy companies — Crescent Petroleum and Pearl Petroleum — were awarded by the London Court of International Arbitration (LCIA) in November.

The court gave the Kurdistan Regional Government 28 days to pay when it made its ruling on 29th November. The KRG disputed the judgement, claiming that the court had yet to hear its counterclaims.

Patrick Allman-Ward, CEO of the Sharjah-based company, told Bloomberg he did not expect to be paid all in one go, and is open to getting paid over time.

The claims relate to payment for production at the Khor Mor and Chemchamal gas fields.

(Source: Bloomberg Business)

Dana Gas Reaches Settlement With RWE

By John Lee.

UAE-based Dana Gas has announced that it has reached an “amicable and mutually beneficial settlement agreement” with RWE’s trading unit RWE Suppy & Trading GmbH (RWEST) to resolve a dispute over its operations in Iraqi Kurdistan.

The detailed terms of the settlement agreement are to be treated in accordance with the confidentiality provisions of the arbitration dispute resolution rules.

As part of the settlement, RWEST Middle East has also joined the Pearl Petroleum consortium as a full partner for 10 percent.

Dana Gas has said that it and its consortium partners are committed to working together with the KRG in order to realise the full potential of the significant resources in the Khor Mor and Chemchemal fields for the benefit of the Kurdistan Region and Iraq, as well as the wider region.

(Source: Dana Gas)

Dana Gas Share Rise on $2bn Iraq Judgement

By John Lee.

Dana Gas has announced that the London Court of International Arbitration (LCIA) has ordered the Kurdistan Regional Government (KRG) to pay $1.98 billion to a consortium that it leads.

In a statement to the Abu Dhabi stock exchange, the Sharjah-based company claims that the judgement is final, binding and internationally enforceable, and that payment must be made within 28 days.

The claims relate to payment for production at the Khor Mor and Chemchamal gas fields.

Meanwhile, the KRG has hit back, pointing out that the court has yet to hear its counterclaims, provisionally quantified by the KRG’s experts at more than $3 billion, and accusing the consortium of creating “an impression that is materially misleading and incomplete”.

Shares in Dana Gas have risen 17 percent, on heavy volume, since the announcement.

(Sources: Dana Gas, KRG, Reuters, BasNews)