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ECONOMY
Pearl Petroleum, a consortium led by Crescent Petroleum and Dana Gas, struck a deal with the KRG in February 2019 to boost gas extraction by 63 percent by the year 2023. File photo: Dana Gas
ERBIL, Kurdistan Region – Emirati energy giant Dana Gas says the global outbreak of coronavirus will not reduce gas production in the Kurdistan Region, as the firm has a “moral responsibility” to keep the local electricity sector afloat.
Dana Gas, a United Arab Emirates-based company linked to Crescent Petroleum, has been operating in the Kurdistan Region since the Kurdistan Regional Government (KRG) began producing oil and gas independently of Baghdad in 2007 and selling independently in 2013.
It mostly operates in Chamchamal and Khor Mor, two fields in Sulaimani province, which contribute to the Kurdistan Region’s electricity sector.
“In the past 12 years, we have witnessed many serious crises. Let me speak about 2014. In that year Daesh [the Islamic State] was just 40 kilometers away from our Khor Mor gas field. We did not stop and our production continued,” Shakir Shakir, head of the firm’s Iraq and Kurdistan Region branch, told Rudaw TV on Tuesday evening.
According to the International Monetary Fund (IMF), the impact of the coronavirus pandemic and the collapse of world oil prices have been “substantial” in the Middle East, especially countries like Iraq, Yemen, and Sudan, where health systems will struggle to cope with a serious crisis.
A standoff between oil-producers Saudi Arabia and Russia has led to a flood of cheap oil on the world market, throwing the price per barrel to its lowest level in years.
The collapse came hand-in-hand with serious disruptions to world trade and freedom movement as nations impose lockdowns to prevent coronavirus contagion.
Despite all the present difficulties, Dana Gas says it will continue to work as normal.
“This is a moral responsibility that Dana Gas and Crescent Petroleum are carrying. Gas production must not stop and it must reach the power stations,” Shakir said.
“Our gas production has not changed. We send 400 million cubic feet of gas on a daily basis to three power stations; two in Sulaimani and one in Erbil.”
The Kurdistan Region has sought to boost its energy production through largely untapped natural gas reserves. Its towns and cities have long wrangled with power outages, with businesses and communities widely dependent on private generators.
“Corona is an illness and God willing it will go away. It does not mean it affects our work. We continue our work to produce gas around the clock thanks to the unlimited support we receive from the KRG and the ministries,” Shakir said.
“We have exerted a lot of effort and made new plans to cope with the new emerging situations because it is indeed a difficult situation in terms of logistics. It is difficult given the borders are closed. Therefore, we have swiftly laid out a plan to cope with the situation.”
Some members of staff have been permitted to work from home, while others continue to do “very, very important” work in the field in the interests of “national security”.
“The plummeting of oil prices, especially recently to around the 20s [dollars per barrel], has had a tremendous effect on the oil and gas industry... But as I said, we are trying to cope with the developments. This fall does not have to discourage us, but rather embolden us to continue the work,” he said.
Dana Gas has already embarked on an extensive, long-term plan to increase gas production in the Kurdistan Region. It already contributes 2,000 megawatts of electricity to the local power grid, Shakir said.
Pearl Petroleum, a consortium led by Crescent Petroleum and Dana Gas, struck a deal with the KRG in February 2019 to boost gas extraction at Chamchamal and especially at Khor Mor by 63 percent by the year 2023.
“As per the plan, we will increase daily production to one billion cubic feet of gas by 2023,” Shakir said. “This is a huge number and will take Kurdistan to a new stage on the economy map.”
The long-term project will require a $1.3 billion investment, he added.
The energy sector in the Kurdistan Region is privately owned, while much of federal Iraq’s sector is state owned. This has presented opportunities for smaller oil and gas companies to take more risks, while larger companies have shied away from such costly ventures.
The Kurdistan Region has only recently begun using natural gas to power its electricity grid. It is hoped that development in the sector will help address the chronic shortages of electricity, especially in the peak periods of demand in the summer and winter.
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