The Kurdistan Gas Project was established in the Kurdistan region of Iraq (KRI). Dana Gas and Crescent Petroleum entered into an agreement with the Kurdistan Regional Government (KRG) for exclusive rights to appraise, develop, produce, market, and sell hydrocarbons from the Khor Mor and Chemchemal fields allowing the government to benefit from stable gas supply for regional power generation. Production from the Khor Mor gas processing plant and the 180 km pipeline supplies gas to power stations in Chemchemal, Bazian and Erbil, generating over 2000 MW of electricity. Production from these newly built facilities began in October 2008, which was within 15 months from project initiation – an industry record. In 2009, Pearl Petroleum (PPCL) was formed as a consortium with Dana Gas and Crescent Petroleum as shareholders (initially 50% each). Today, Dana Gas and Crescent Petroleum each owns 35% after OMV, MOL, and RWE joined PPCL, purchasing a 10% share each.
The Kurdistan Gas Project was the first time that an international oil and gas company began producing gas in the KRI. To date, all of the gas produced by PPCL has been used for in-country power generation, providing affordable electricity in the KRI.,The Khor Mor processing plant produces natural gas liquids (NGL or gas condensate) and liquefied petroleum gas (LPG), which are sold to the KRG and local traders.
Initially, the Khor Mor plant produced around 300 million standard cubic feet per day (MMscf/d). Following a number of process improvements at the Khor Mor gas plant, including a bypass project completed in 2020 as well as two debottlenecking projects which were carried out in 2018 and 2022, production capacity was boosted by more than 60% from from 305 MMscf/d in 2018 to 500 MMscf/d at the end of 2022.
In 2019 signed a 20-year Gas Sales Agreement with the KRG to enable production and sales of an additional 250 MMSCF/day (“KM250 project”).
The KM250 expansion that is scheduled to deliver first gas in April 2024 involves a total investment of US$806 million.
The uninterrupted supply of gas to power plants in Erbil, Chemchemal and Bazian provides fuel for over 80% of the KRI’s power generation. It has resulted in significant fuel cost savings through substitution of diesel representing both environmental and economic benefits for the Kurdistan Region and Iraq as a whole. The displacement of diesel fuel for power generation with gas has enabled emissions savings of 42 million tonnes of CO2, equivalent to the combined GHG emissions from 9 million passenger vehicles driven for one year.
Operations are predominantly staffed by local nationals, which represent over 80% of the workforce. Local staff continue to be trained to increase this further. The company has a long history of contributing directly to local communities, including supply of local power to neighbouring communities and various health, education and infrastructure programmes, which continued in 2022.
In 2022 Pearl’s production (Dana Gas 35%) in the KRI increased by 1.2% year on year to 97,800 boepd (34,200 boepd for Dana Gas), consisting of 425 MMscf/d sales gas, 14,550 bbl/d condensate and 1070 MTPD of LPG. In October 2022 PPCL successfully increased its production capacity in the KRI by 50 MMscf/d following debottleneck project completion. This increased Khor Mor plant capacity by a further 11% to 500 MMscf/d. This was a notable achievement by our KRI team who delivered the project safely, ahead of time and below budget. The additional gas production will enable a 250 MW increase in the KRI’s power generation capacity.
The significant reserves in Khor Mor and Chemchemal were independently audited by GCA in May 2019. Their report showed that Dana Gas’ share of the Khor Mor and Chemchemal 2P reserves was 4.4 Tscf gas, 136 MMbbl condensate and 13.3 million MT of LPG. The report showed that Dana Gas reserves increased by 10% to 1,087 MMboe. Part of the increase in reserves was due to the booking of 18 MMbbl of oil reserves for the first time in the Kor Mor field. This places the Khor Mor and Chemchemal fields among the biggest gas fields in the whole of Iraq, making them world-class assets.
The Company’s ambitious expansion programme in the KRI aims to increase daily production to approach 1 billion scf/d of gas and 35,000 bbl of condensate. This expansion involves the addition of two incremental, gas processing trains of 250 MMscf/d each ( KM 250 and KM 500 projects).
The first gas processing train, KM 250, has made good progress and is expected to deliver first gas in Q2 2024.
This project involves a total investment of US$806 million and will add 250 MMscf/d of sales gas and 7000 bbl/d of condensate to the current production. Under the Gas Sales agreement the additional quantities of gas will be used to supply local power stations with affordable and environmentally cleaner fuel, and further enhance electricity supplies to the region.
In September 2021, Pearl Petroleum signed a US$250 million financing agreement with the U.S. International Development Finance Corporation (DFC) to help fund the KM 250 expansion project. The remaining financing requirements were earlier secured through a regional bank facility and the EPC contractor.
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