UAE's Dana Gas may hit 950 MMcf/d capacity in Iraq's Kurdish region before 2025

UAE's Dana Gas may hit a gas production capacity of 950 MMcf/d following a second train expansion at the Kurdish field of Khor Mor and the supply to local markets or beyond will depend on market needs, the company's CEO said Feb. 9.

Dana Gas, which is currently expecting first gas from the first 250 MMcf/d gas train expansion by the second quarter of 2023 to add to the current 452 MMcf/d, is in talks with the Kurdistan Regional Government for a sales agreement for the second train that will add another 250 MMcf/d by late 2024 or the beginning of 2025, Patrick Allman-Ward said on a media call.

"We are in discussions with the Kurdistan Regional Government for a gas sales agreement for the second 250 MMcf/d Khor Mor gas train," said Allman-Ward. "We hope those will be finalized shortly. As long as the market is there once the second train comes on stream, we should ramp up in a couple of months."

Dana Gas production from Kurdistan rose 5% in 2021 to 33,800 boe/d, which includes condensate and LPG.

If the KRG were to take all of the company's gas for power generation, it would be producing far too much electricity than it currently needs, which may necessitate the export of electricity or the gas itself, the CEO said.

"The KRG has got a total installed generation capacity to absorb the amount of gas but would generate far too much for its requirements," said Allman-Ward. "If they take all the gas for power generation then they will need to export electricity to markets in the area or export the gas directly to other markets."

Erbil-Duhok pipeline

However, a potential export market is Turkey following the decision to construct a common user pipeline connecting the Kurdish capital Erbil to Duhok near the border with Turkey, he said.

With the expansion of pipelines in Kurdistan, the second train gas will flow from Khor Mor to Erbil, doubling the gas export line, he added.

"The good news of course with the common user pipeline and expansion being put in place and the expansion from Khor Mor to Erbil is that we will be able to put the entire volume of gas through to the common user pipeline," Allman-Ward said.

"The Turks have already built gas pipelines to the border. It does not take very much additional effort to connect the whole [gas] system together. We have for years been flagging the massive resources we have available in our Khor Mor and Chemchemal fields in in the Kurdistan region and the potential for these fields to supply markets not just domestically in Kurdistan and in Iraq as a whole but also to further markets in Turkey and the European Union," he added.

The semi-autonomous Kurdistan region has also previously held talks with the federal government in Baghdad on potential gas supply.

Federal gas needs

Federal Iraq is in dire need of domestic gas supplies because most of its production is pumped with oil and is flared, prompting Baghdad to rely on Iranian gas and electricity supply to plug power shortages. However, Iraq is receiving US waivers to continue importing Iranian energy, which has been subject to sanctions reimposed by Washington under the previous administration of Donald Trump in 2018.

"We have flagged to the federal government and the ministry of oil that we have spare capacity available from our Khor Mor field to potentially supply the federal government through the Jambur pipeline, which originally was purposed for condensate export but can be repurposed for gas export," Allman-Ward said. "Discussions have taken place, but they have not concluded yet."

In April 2007, Dana Gas and Crescent Petroleum entered into an agreement with the Kurdistan Regional Government for exclusive rights to appraise, develop, produce, market and sell petroleum and gas from the Khor Mor and Chemchemal fields in the region. The other shareholders in the Pearl consortium are OMV, MOL and RWE with a 10% stake each.