Pearl Petroleum, a five-company consortium that includes Sharjah-based Dana Gas as one of the biggest shareholders (35 percent), has formally served a notice of termination to EPC contractor Enerflex.
In a disclosure made to the Abu Dhabi Securities Exchange (ADX), Dana Gas said the decision was taken “following numerous performance issues which have arisen during the execution of the contract works”.
Enerflex, based in Calgary, Canada, is the EPC contractor for the KM 250 project in the Kurdistan Region of Iraq (KRI).
The 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.
Pearl Petroleum’s intervention
In the statement to ADX, Dana Gas said: “The ongoing impact of these performance issues has materially affected Enerflex’s ability to meet its contractual obligations, leading to unacceptable delays and hindering the progress and timely completion of the Khor Mor gas expansion project (KM250) in KRI.
“As a result, Pearl Petroleum has been compelled to intervene directly to ensure the timely and successful completion of the project.
“To safeguard the interests of Pearl Petroleum, its stakeholders and the people of the KRI, the company has taken the necessary step of issuing this notice of termination. This action will enable Pearl Petroleum to assume direct control over the remaining phases of the project, ensuring that it is brought back on track and completed in the timeliest manner.”
Pearl Petroleum reserves all its rights under the contract including potential claims for damages.
Dana Gas announced it second quarter result earlier this month and reported improved gross profit margins and a net profit increase of 3 percent to AED124 million ($33.76 million).
Dana Gas 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 was given exclusive rights to appraise, develop, process, market and sell petroleum from the two blocks alongside Crescent Petroleum.
Pearl Petroleum was founded in 2009 as a joint venture between Dana Gas and Crescent Petroleum. 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 after acquiring a 10 percent share in the company.
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