ERBIL, Kurdistan Region - The Kurdistan Regional Government (KRG) has censured a decision by the joint operators of the Region's eastern Khor Mor field to supply gas to Baghdad's electricity ministry as "unilateral" and a "breach" of contractual obligations. This comes days after UAE-based Dana Gas and its affiliate Crescent Petroleum said they had commenced deliveries from the field to support Iraq's power sector.
"The operators' unilateral decision to commence gas supplies without the KRG's approval and outside the contractual framework governing the Khor Mor project constitutes a breach of their contractual obligations and represents an unwarranted interference in the institutional arrangements governing the relationship between the KRG and the Federal Government [of Iraq]," the regional government said in a Thursday statement.
The KRG described the operators' actions as "particularly disappointing," saying Erbil "has repeatedly requested additional gas supplies for facilities with more demand for gas," noting that those facilities were developed to strengthen electricity supply within the Kurdistan Region and Iraq.
"Instead of working with the KRG to achieve these shared objectives, the operators chose to proceed unilaterally," the statement added.
Dana Gas and Crescent Petroleum said Tuesday that, under a December agreement with the federal electricity ministry, they would supply 100 million standard cubic feet per day (MMscf/d) of gas from the Khor Mor processing facility to the Kirkuk Taza power station for an initial one-year term "to help improve power generation and services" in Iraq.
Majid Jafar, CEO of Crescent Petroleum and managing director of the board of Dana Gas, described the first delivery in the same statement as "an important milestone for the companies in their development of the gas sector in the Kurdistan Region" and in "supporting the growing electricity demand for Iraq."
He thanked partners in the KRG and Baghdad's electricity ministry for "their support and partnership in making this achievement possible."
However, the KRG said Thursday it "neither approved nor authorised" the operators' decision, adding that any suggestion it endorsed or supported the move "is inaccurate and misleading," and noting that it was only informed "at the same time as the companies' public announcement."
The regional government added that it was "reviewing the legal, contractual and operational consequences of the operators' actions and will take all appropriate measures to protect its contractual rights" and "safeguard the energy interests of the people of the Kurdistan Region and Iraq."
"The KRG remains committed to working constructively with the Federal Government of Iraq to increase gas production and electricity generation through arrangements that are mutually agreed, contractually compliant and in the interests of people," the statement concluded.
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