Dana Gas says Pearl Petroleum has initiated arbitration against Enerflex

Pearl Petroleum is a five-company consortium that includes Sharjah-based Dana Gas as one of the biggest shareholders with 35 percent stake.

Last month, the company had formally served a notice of termination to Canadian company Enerflex on 19 August, saying the decision was taken “following numerous performance issues which have arisen during the execution of the contract works”.

Pearl Petroleum’s arbitration action

That termination took effect on 9 September, and Pearl Petroleum has now initiated arbitration action in accordance with the contract “to recover costs and damages arising from Enerflex’s defective performance”.

The disclosure added that “Pearl Petroleum is committed to ensuring the successful completion of the project and to safeguarding the interests of its stakeholders and the people of the KRI”.

Dana Gas will update the market on the new expected completion date as it works with its Pearl Petroleum partners to bring the project back on track.

The KM250 facility had come under terrorist attack earlier this year on April 26 when a drone strike caused the death of four workers and forced operations to be suspended for almost two weeks.

Dana Gas announced it second quarter result in August and reported improved gross profit margins and a net profit increase of 3 percent to AED124 million ($33.76 million).

Dana Gas and Crescent Petroleum entered an agreement with the Kurdistan Regional Government of Iraq in 2007 for the appraisal and development of the Khor Mor and Chemchemal gas fields and were given exclusive rights to develop, process, market and sell petroleum from the two blocks. In 2009, Pearl Petroleum was founded as a joint venture between the two companies.

Two major European energy companies – OMV of Austria and MOL of Hungary – became 10 percent shareholders in Pearl Petroleum later that year. Germany’s RWEST joined the consortium in 2015 and has 10 percent share in the company as well.