By Amina Ismail and Maha El Dahan
ERBIL (Reuters) – A series of missile attacks on a gas field in northern Iraq has prompted US contractors to work on packing its expansion, dealing a blow to the region’s hopes of boosting revenues. Kurds and provide a small alternative to Russian gas.
The Khor Mor field expansion project led by Pearl Consortium, majority owned by Dana Gas in Abu Dhabi and its affiliate Crescent Petroleum, was suspended at the end of June following three missile attacks.
Workers from Texan’s Exterran Corp returned last month to resume work, but two more rockets hit the site on July 25, forcing the company to leave again without has a planned return date, industry and Kurdish sources said.
Khor Mor is one of the largest gas fields in Iraq and the expansion plans to double production in an area that desperately needs more gas to generate electricity and end near-daily power outages.
Sources said there was no serious damage from the attacks and current operations were not disrupted but that the expansion, which includes the construction of a new pipeline at a later stage to Turkey, was suspended until security in the area was ensured, the sources said.
The project, partially funded through a $250 million financing agreement with the United States International Development Finance Corporation, also aims to export gas to Turkey and Europe, as market demand in water has been met.
Exterran (NYSE:) is the third contractor to be discharged since attacks began on the sector on June 21, with two Turkish subcontractors, Havatek and Biltek, having halted work. .
Dana Gas declined to comment. Exterran, Havatek and Biltek did not respond to requests for comment.
Last year, the Kurdish government signed a contract with domestic energy company KAR Group to build a pipeline from Khor Mor through the regional capital Erbil to the city of Dohuk, close to the Turkish border. parallel to an existing pipeline.
The delay could subject the heavily indebted Kurdistan Regional Government (KRG) to a sizable penalty and would put the Kurds’ gas export plans on hold.
Government sources said that if the infrastructure is not ready by May 2023, the Kurdish government will have to pay Dana Gas 40 million USD per month.
“More than that, reputational damage as security threats add another layer of risk,” said Ali Al-Saffar, Middle East and North Africa program director at the International Energy Agency. may affect the cost of capital and insurance”.
KRG did not respond to a request for comment.
Dana Gas has the right to exploit the two largest gas fields in Iraq, Khor Mor and Chemchemal, which produce about 450 million cubic feet of gas per day. It plans to more than double production to 1 billion cubic feet per day over the next few years, enough to meet domestic demand.
With proven reserves of 16 trillion cubic feet, production could then increase to 1.5 billion cubic feet a day, leaving a large amount for export.
Dana Gas supplies about 80 percent of the gas fuel to the region, according to an industry source.
However, the region’s plans to export gas could threaten Iran’s position as a major gas supplier to Iraq and Turkey at a time when its economy is still reeling from international threats. international sanctions.
In March, Iran’s Islamic Revolutionary Guard Corps (IRGC) fired dozens of ballistic missiles at Erbil in an attack that appeared to target its plans to supply gas to Turkey and Europe. region, officials said.
While no group has claimed responsibility for the five attacks on Khor Mor since June, Kurdish officials, diplomats, industry sources and energy experts have said they believe they were carried out. carried out by Iran-backed militias.
Iran’s Foreign Ministry did not respond to a request for comment.
However, two diplomats based in Iraq said they believe competition within the Patriotic Union of Kurdistan (PUK), which controls the land with the field, caused one side to retaliate for being excluded from the project. extend.
An unnamed PUK official denied this version of events.
LAND WITHOUT PEOPLE
The Khor Mor field is close to the no-man’s-land in the midst of the Iraqi army, Kurdish forces and Shi’ite militias, from which the first three missile attacks were launched.
Because there is no agreement on control of the territory, there are areas where the Iraqi army and Kurdish forces cannot enter, leaving a security vacuum where the militias are operating.
But the last two attacks with larger missiles came from areas near the city of Kirkuk, which is under federal government control.
A Kurdish official said: “Khor Mor has a lot of potential and can help the Kurds. “We are attacked from all sides. The future is very uncertain.”
The setback to the gas plan comes at a time when the oil sector, the region’s financial lifeline, is also struggling.
Oil reserves are dwindling at more than double the global average, and a February Federal Supreme Court ruling that the legal basis of the Kurdistan region’s oil and gas industry is unconstitutional, forcing some Foreign oil companies had to leave.
Exterran has halted work for security reasons, instead government, industry and government sources said.
Further delays in investment in the sector will weigh on KRG, which is facing an economic crisis in a region already struggling in an unstable Iraq.
According to a government official and MP Karwan Gaznay, a member of the region’s oil and gas committee, the KRG’s debt now stands at about $38 billion, saying oil exports account for 85% of the Iraqi Kurdistan’s budget.
Delays in public sector wages, poor public services and corruption have fueled often violent protests over the past two years against political parties that run the region.
Widespread economic hardship among young Kurds is also one of the main factors behind the migrant crisis on the Belarus-EU border that begins in 2021.
(1 dollar = 1,458,5400 Iraqi dinars)