UAE's Dana Gas suspends gas expansion project in Iraq's Kurdistan after three attacks

UAE's Dana Gas has suspended a 250 MMcf/d expansion project at its Khor Mor field in Iraq's semi-autonomous Kurdistan region following three rocket attacks in less than a week on its facilities amid an escalation of strikes on energy infrastructure in the area.

"Production operations continue as normal, however the work on the KM 250 expansion project has been temporarily suspended while security enhancements are carried out," Dana Gas said June 27 in a statement to the Abu Dhabi Securities Exchange where its shares are listed. "As a response to these attacks the KRG has taken all necessary measures to enhance security measures in Khor Mor including the mobilization of further armed forces to protect the facilities."

Dana Gas, the biggest gas producer in Kurdistan, was planning to increase Khor Mor's production capacity from the current 450 MMcf/d to 700 MMcf/d by the second quarter of 2023. The expansion project received a $250 loan from the US International Development Finance Corp. in 2021.

Dana Gas' production from Kurdistan remained largely unchanged at 35,400 boe/d in the first quarter of 2022 compared with 35,300 boe/d during the same period in 2021.

Enhanced security

The attack is the latest escalation in the region impacting Kurdish energy assets.

On June 22, a small rocket fell near the field, slightly injuring two contractors, while a second missile attack occurred on June 24, hitting residential facilities operated by the company and a third attack happened on June 25.

The KRG is taking "all measures necessary to protect critical public infrastructure and oil and gas installations," Kurdish Prime Minister Masrour Barzani said in a June 26 statement.

"As part of the plan, we have agreed to reinforce the area with additional forces," he added.

The strikes come amid ratcheting of tensions between the Kurdistan Regional Government and the federal Iraqi government over Baghdad's attempt to take control of the Kurdish energy sector, which has operated independently since 2007.

In April 2007, Dana Gas and its parent company Crescent Petroleum entered into an agreement with the KRG for exclusive rights to appraise, develop, produce, market and sell petroleum and gas from the Khor Mor and Chemchemal fields. Other shareholders in what is called the Pearl consortium are OMV, MOL and RWE, with a 10% stake each.