ERBIL, Kurdistan Region of Iraq - The Kurdistan Regional Government (KRG) on Thursday accused the UAE-based Dana Gas and its affiliate Crescent Petroleum of violating their contractual obligations with Erbil, saying the companies’ move to supply the Iraqi electricity ministry with natural gas from Sulaimani’s Khor Mor field was made without KRG’s consent.

In a statement on Tuesday, Dana Gas and Crescent Petroleum said they have commenced supplies of natural gas from the vital Khor Mor gas field to the Iraqi electricity ministry, hailing the development as a “major step” to “open new markets and deliver much needed gas by pipeline from the Khor Mor gas processing facility.”

“The KRG was notified about this [action] only once the companies made the official announcement,” read a statement from the KRG on Thursday.

The statement clarified that KRG has never been against the supply of gas or electricity to any part of Iraq, stressing Erbil’s commitment to strengthening energy security across the country, and highlighting the “significant progress” made in strengthening cooperation with the Iraqi federal government in the energy sector, but emphasized that such arrangements must be made “in full compliance with the framework of the applicable contracts and with the consent of the KRG as the contracting party.”

Accordinly, “the companies’ unilateral decision to start supplying gas without the consent of the KRG and outside the contractual framework governing the Khor Mor project is considered a breach of the contract,” the statement noted.

Dana Gas and Crescent Petroleum struck a deal with the KRG in 2007 to develop the Kurdistan Region’s gas capacities. 

Located in Sulaimani province's Chamchamal district, the Khor Mor field is the largest supplier of electricity in the Kurdistan Region, with natural gas reserves of around 1.8 trillion cubic feet

In the Thursday statement, the KRG pointed out that the development comes despite Crescent and Dana Gas’ refusal to cooperate with the Erbil government’s repeated requests for more natural gas supplies for facilities in the Kurdistan Region.

The KRG also rejected the firms’ thanking the KRG for supporting the recent measure, stating that: “The KRG has neither consented nor authorized this move, and any insinuation that it supported or championed the operators’ unilateral decision is untrue and misleading.”

“The KRG is currently assessing the legal, contractual and operational consequences of the companies' actions and taking all appropriate measures to protect its contractual rights, the contractual framework governing the Khor Mor project and the interests of the people of the Kurdistan Region and Iraq in the energy sector,” it added, emphasizing that it will continue to work with the Baghdad government to boost gas and power production “through measures that are agreed upon, and that are contractually appropriate and in the best interests of the people.”

According to the statement from Dana Gas and Crescent, the companies would supply 100 MMscf/d of gas from Khor Mor to Kirkuk’s Taza power station for an initial term of one year.

In October, Dana Gas began commercial gas sales from a mega expansion project in Khor Mor – known as KM250 – eight months ahead of schedule, boosting the field’s total output by 50 percent to 750 MMscf/d.