MEOG: Dana Gas commits to Khor Mor expansion

UAE-based Dana Gas has announced it is pressing ahead with its natural gas expansion project in the Kurdistan Region, following the end of a contract with a key supplier. The news came in a press release on November 8, coinciding with the company's financial results for the first nine months of the year.

The KM250 project aims to boost gas production in the Khor Mor field in Sulaimani’s Chamchamal district by 250mn cubic feet (7.1mn cubic metres) per day within two years. Dana Gas CEO Richard Hall highlighted their efforts, saying: “Looking ahead, we are working diligently towards resuming full construction activities on our KM250 project, and our focus remains firmly on delivering the first commercial gas by Q2 2026.”

In September, Dana Gas took legal action against Enerflex, a supplier in the gas industry, over alleged performance issues that delayed the KM250 project. Kurdistan's Rudaw media outlet quoted Enerflex's response to the allegations, in which the company accused Dana Gas of wrongful contract termination and citing safety concerns that halted their operations. It said that Dana Gas made “a wrongful attempt … to circumvent Enerflex’s contractual rights to suspend performance while the project site remains unsafe.”

Following the contract termination with Enerflex, Pearl Petroleum, Dana Gas’ consortium partner, has taken over direct control of the construction, with full-scale activities set to restart soon. The Khor Mor gas field, producing over 500 mmcf (14.2mcm) per day, is the main gas supplier for the Kurdistan Region’s power plants.

Dana Gas reported a net profit of $112mn for the first nine months of this year, down from $126mn in the same period last year, attributing the decline to “lower realised prices and production decline in Egypt.” Despite these challenges, the company's production in the Kurdistan Region saw a 3% increase, while overall production fell by 8%.

In October, Pearl raised $350mn through a well-received bond issue with a 3.5-year maturity, ensuring sufficient funds for the completion of KM250 and covering remaining capital expenditure needs. Dana Gas highlighted its focus on cost and production optimisation in the Kurdistan Region, helping mitigate the financial impact of these challenges.

The company's overall production averaged 55,300 barrels of oil equivalent per day during the first nine months of the year, down 8% from the same period in 2023. However, production in Kurdistan grew by 3% to 38,200 boepd, driven by higher gas volumes supplied to local power plants due to stronger demand.

If you’d like to read more about the key events shaping the Middle East's oil and gas sector then please click here for NewsBase’s MEOG Monitor.