The largest oil and gas investor in Iraqi Kurdistan has initiated the first major legal case against the regional government over payments and production rights, just as the autonomous enclave is on the cusp of becoming a major energy exporter.
Abu Dhabi-listed Dana Gas, leading a consortium of energy investors, has filed an arbitration case inLondon to clarify the amount of money they are owed for work already carried out in the area and on their rights to develop and market gas fields, the company said on Tuesday.
The Kurdish Regional Government is due to start its first crude oil exports via a new pipeline by end-2013, bolstering its long search for independence as it will soon earn more from its exports than it receives from the central government in Baghdad.
Pearl Petroleum - owned by Dana, Crescent Petroleum of the UAE, Austria's OMV, and Hungarian oil and gas group MOL - wants "clarification" from the Ministry of Natural Resources of its contract with the government to develop and market gas from the Khor Mor and Chemchemal fields, Dana said.
To date, the Pearl consortium has invested over $1 billion and produced approximately 100 million barrels of oil equivalent of gas and petroleum liquids in Kurdistan, the statement said.
Dana, which holds 40 percent of the Pearl consortium, has previously said it alone is owed about $430 million by the Kurdish government.
Dana said it was resorting to arbitration after an effort to resolve its differences with the ministry through impartial mediation failed.
The company "very much hopes that all outstanding matters with the Ministry of Natural Resources will be resolved, amicably and in good faith, in the shortest possible time, in order to enable full and proper development of the fields."
The case was filed at the London Court of International Arbitration under the terms of Dana's 2007 agreement with Kurdistan, the company said. There was no immediate comment from the Kurdistan government.
Kurdistan's relatively safe operating environment compared to southern Iraq, and favourable production-sharing terms, have attracted international oil firms such as Exxon, Chevron and Total SA to the autonomous region, despite its dispute with the central Iraqi government in Baghdad over how to share energy revenues.
Announcing its third-quarter earnings last week, OMV said it would book net special charges of around 100 million euros ($135 million) for the quarter, partly because of the write-down of an asset in Kurdistan.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.