By Amena Bakr
Decision by Sharjah-based exploration company comes despite rejection of deal by Baghdad gov't.
UAE's Dana Gas will go ahead with its project in Iraq's Kurdistan region despite the federal government's rejection of the deal, a Dana Gas source told Reuters on Sunday.
Last month the UAE's Crescent Petroleum and affiliate Dana Gas formed a consortium with Austria's OMV and Hungary's MOL to pump enough gas from Iraq's Kurdistan region to kick-start the Nabucco pipeline to Europe via Turkey.
Shortly following the announcement, the Iraqi federal government rejected the deal signed by the Kurdish Regional Government (KRG), creating a potential hurdle for the project.
"These are all inner conflicts and we have nothing to do with them," said a source from Dana Gas who spoke to Reuters under condition of anonymity on the sidelines of a conference in Sharjah.
"From a legal standpoint, our contact is one hundred percent valid ...what is happening between the Kurdish government and the federal government is a conflict we have no part in," the source added.
In the past the Iraqi oil ministry has criticised oil and gas contracts that the Kurdistan government has signed with international oil companies, calling them illegal.
The Western-backed Nabucco pipeline aims to lessen Europe's dependence on Russian gas. Until now, the $10 billion pipeline project had plenty of willing buyers in Europe but little gas to sell.
OMV will pay $350 million to Crescent and Dana for a 10 percent stake in their Kurdistan operating unit Pearl Petroleum. Before the deal, Crescent and Dana each held 50 percent in Pearl.
MOL will give 3 percent of its shares each to Crescent and Dana. In return, MOL will also take 10 percent in Pearl.
Badr Jafar, executive director for Crescent Petroleum, told Reuters that the assets in the region have the potential to produce over 3 billion cubic feet per day (cfd) by 2014. (Reuters)For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.