Crescent begins gas production in Iraq's Kurdish region

TENSIONS FLARE: The regional government's separate deal has annoyed the central authorities in Baghdad. (Getty Images)

Dana Gas and its partner Crescent Petroleum, both Sharjah-based, have begun natural gas production, processing and transportation by pipeline in their controversial joint project signed in the Kurdistan Regionional Government (KRG) in Northern Iraq, the two companies said on Saturday.

The gas will supply new power plants under construction near Erbil and Sulaimaniya, which will provide eventually 1,250 MW of electricity for over four million Iraqi citizens, saving the country approximately $2.5 billion a year in liquid fuel import costs, the companies said. 

The central government in Baghdad has voiced anger at the KRG's signing of a string of oil and gas deals with foreign oil companies, insisting such deals ought to await the passage by the Iraqi parliament of a new oil and gas law.

But in recent weeks, the central government has signed a number of deals with Western oil majors under the old legislation inherited from the ousted regime of Saddam Hussein, expressing exasperation at MPs' delay in approving its proposals for a new law.
Dana Gas and Crescent Petroleum are 50:50 partners on the project, and are investing $650 million under a Strategic Alliance and service contracts signed with the KRG in April 2007.
 
"As part of the project implementation, the primary phase completed in a record time of 15 months, the companies have installed a 180km gas pipeline across mountainous terrain that required the clearing of minefields. In addition, upstream activities on seismic surveys and production wells were carried out, and brand new gas processing facilities were installed," they said. 

The initial primary phase gas production is at 75 million cubic feet per day, and will rise in stages to 300 million cubic feet per day within the first half of 2009, as the power plants become fully operational, they added.

In total, more than 50,000 tonnes of equipment were imported in over 2,300 truck-loads, and around two thousand Iraqi workers from all ethnic groups and sects worked together in implementing the project, supported by expatriate workers from more than 20 nationalities in the region and worldwide.

The pipe material was supplied from China and Thailand, and the gas processing plant was imported from the USA. Local private companies with Turkish partners were used as contractors in order to maximize local content and develop local experience and expertise.

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