Abu Dhabi – Mubasher: The Kurdistan Regional Government of Iraq (KRG) and Pearl Consortium have announced reaching an agreement regarding the arbitration of the Khor Mor and Chemchemal fields in Iraq.
“The Parties have mutually agreed to fully and finally settle all their differences amicably by terminating the Arbitration and related court proceedings, and releasing all remaining claims between them, including the substantial damages asserted by the Consortium against the KRG,” a statement released by Dana Gas, who is part of the consortium said.
Under the deal, the parties will also implement a settlement mechanism of $2.239 billion, which was “awarded by the Tribunal to date,” the statement added late Thursday.
The Pearl Consortium comprises UAE-based Dana Gas, Crescent Petroleum Company International Limited, and Pearl Petroleum Company Limited (Pearl).
In accordance with the new agreement, the KRG will immediately pay Pearl a sum of $600 million, in addition to $400 million “to be dedicated for investment exclusively for the aforesaid further development to substantially increase production.”
Meanwhile, Pearl will raise its gas production by 160% or 500 MMscf/day, from current output levels, at Khor Mor. This “Additional Gas” along with “significant additional amounts of condensate, is expected to begin production in approximately two years,” Dana Gas added in its statement.
The KRG will buy 50% of the Additional Gas “on agreed terms” to increase gas supply to power generation plants in the Kurdistan Region, while the remaining 50% will be marketed and sold by Pearl to customers in Iraq or by export. Pearl’s share may also be sold to the KRG “to further boost power generation within Iraq.”
As for the balance of sums awarded by the Tribunal and amounting to $1.239 billion, these, Dana said, will “no longer [be] a debt owed by the KRG and will be reclassified as outstanding cost recoverable by Pearl from future revenues generated from the HoA areas.”
After the recovery of costs and a return on investment by the Consortium, 78% of revenues generated from the HoA areas will be given to the KRG, while the remaining 22% will be given to Pearl, the statement showed.
The KRG has also awarded blocks 19 and 20 to the Consortium and added them to the HoA areas, while the Consortium is not committed to make appraisal investments on these blocks as well as developments in the event that commercial oil or gas is found.
“The Parties have also amended and clarified the HoA language and terms, including extension of the term of the contract until 2049,” Dana revealed.
