By Kevin Baxter and Abdelghani Henni
Two UAE-based companies, Dana Gas PGSC and Crescent Petroleum are to join forces with OMV from Austria and MOL Hungarian Oil and Gas Company in a bid to develop Iraq’s natural gas reserves and make the country a supplier to both local and European markets.
The deal involves OMV paying US$350 million in return for a 10% share in Pearl Petroleum, the company that holds Dana and Crescent’s upstream interests in the Kurdistan Region. The money will be reinvested in the project. MOL will also get a 10% share in Pearl Petroleum in return for Dana and Crescent each receiving a 3% share in the Hungarian company.
The strategic move is an attempt to develop the Nabucco gas pipeline. The Nabucco project involves pumping around 3 billion cubic feet per day (cfpd) of gas from the Middle East and Caspian regions into Europe via a pipeline through Turkey.
“Our joint project in the Kurdistan Region now has the full potential of linking the Region’s significant gas reserves to Europe by pipe for the first time, after satisfying all local requirements of course,” Badr Jafar, executive director of Crescent Petroleum said.
“This will create very material investments in the Kurdistan Region of Iraq in the coming years, with significant employment opportunities and ancillary benefits for all of Iraq and Iraqis, and for the entire region,” he added.
The first phase of the Nabucco gas pipeline is hoped to be completed by 2015 and will have a capacity of around 1.5 billion cfpd. It is believed that Russia, Europe’s current largest supplier of gas, opposes the project.
Both Dana Gas and Crescent Petroleum have spent $605 million to date fast-tracking the development of the Khor Mor gas field and a local natural gas network, including construction of a 176km natural gas transmission pipeline in record time.
It is understood that the four partners in the project will invest an estimated $8 billion into the scheme to both service the local Iraq market as well as transport the surplus gas to markets in Europe.
After the agreement was announced shares in Dana Gas, listed on the Abu Dhabi exchange, surged by 9.2% in 24 hours.
