Arab Today, arab today uae’s dana gas wins favourable ruling in kurdish dispute
Last Updated : GMT 09:05:21
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UAE’s Dana Gas wins favourable ruling in Kurdish dispute

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Arab Today, arab today UAE’s Dana Gas wins favourable ruling in Kurdish dispute

Shares of Abu Dhabi-listed Dana Gas
Abu Dhabi - WAM

Shares of Abu Dhabi-listed Dana Gas surged 13.7 per cent after the company won another court ruling in its long-running dispute with the Kurdish Regional Government (KRG) in Iraq over payment arrears of US$2 billion.

The shares closed at Dh0.58, their highest level this year, although they were still down from Dh0.80 this time last year.

The Sharjah-based oil and gas exploration firm said yesterday that the London Court of International Arbitration on Thursday ruled that its Pearl Petroleum consortium – which includes partners Crescent Petroleum, OMV of Austria and Hungary's MOL – has exclusive rights to develop the Khor Mor and Chemchema concession in the Kurdish region for a period of not less than 25 years.

The court also ruled that the consortium was entitled to receive international prices for the concession's output of liquefied petroleum gas and condensate, and that Dana Gas was solely entitled to the proceeds from selling stakes in the project to OMV and MOL.

The court's decision means that it is quite likely that the final monetary judgment, which it is scheduled to make in September, will award Dana Gas and its partners entitlement to the full amount of arrears outstanding.

Total arrears stood at nearly US$2bn at the end of May, Dana Gas said.

Thursday's ruling is the latest in a series of decisions in favour of the consortium since it took its dispute to arbitration in late 2013.

Despite the court's rulings, Dana Gas is likely to face a long process to recover the money it is owed.

The dispute has occurred at a time when the KRG is still deeply mired in both an unresolved tussle with Iraq's central government over control and compensation for oil produced in the region, as well as its bitter and costly war against militants to its west and south.

According to lawyers familiar with such disputes, Dana Gas and its partners could sue the KRG in other jurisdictions to seize its export oil in lieu of payment, although that would be a messy and expensive process.

Even if the KRG was able to reach a negotiated settlement with Dana Gas and its partners – which Patrick Allman-Ward, the chief executive of Dana Gas, has repeatedly said is the company's preferred option – the regional government currently does not have the money and has struggled even to pay its own employees in the region.

The company has had chronic problems in both its main operating areas, the KRG and Egypt. However, in Egypt it has made progress recently as the new government has moved to resolve arrears issues to unlock further investment.

Dana Gas reported in May that overall production last year was steady at 68,700 barrels of oil equivalent per day (boepd). Egyptian production fell 1,400 boepd to 37,700 boepd because of natural field depletion. Production at the Khor Mor gasfield was up 1,100 boepd at 30,400 boepd.

Dana Gas executives have said they hoped to sort out their issues in the KRG so they could make further investment which, they argue, would make the region energy self-sufficient and eventually a major gas exporter.

 

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