Dana Gas wins arbitration case against KRG

Dana Gas, one of the largest investors in the semi-autonomous region of northern Iraq, said on Sunday it had won an arbitration award to force some outstanding payments from the Kurdistan Regional Government.

United Arab Emirates-based Dana Gas, which leads a consortium of investors, launched London arbitration proceedings in October, demanding payment of receivables for products delivered and a confirmation of its rights under the 25-year contract to develop the Khor Mor and Chemchemal gasfields.

Dana Gas said the tribunal had ordered on July 10 for the KRG "to restore the previous regular payment . . . as of March 21 2014, the date of the application, and until the case is concluded".

The Dana Gas-led Pearl consortium's claims for unpaid receivables have risen to more than $1.46bn. Before KRG payments ceased in July 2013, the group was receiving about $30m a month.

KRG officials were not immediately available for comment. When the London case was lodged, the KRG said it did not owe any receivables, claiming that it was Dana Gas that owed "significant sums".

The tribunal is another complication in the KRG's efforts to foster its domestic oil and gas industry as the autonomous region of northern Iraq ponders independence amid the Sunni insurgency's challenge to Iraq's territorial integrity.

Kurdish forces have seized oilfields in and around the northern Iraqi city of Kirkuk, contributing to a rise in tensions between the KRG and the Shia-led government in Baghdad.

Iraq's largest oil reserves are located in Shia-dominated southern Iraq, which remains relatively shielded from the unrest.

Before the current chaos in northern Iraq, investors had been flocking to the Kurdish region as a haven of security in the war-ravaged country.

Oil majors such as ExxonMobil have taken advantage of the KRG's more lucrative production-sharing deals, despite threats from Baghdad, which regards these contracts as illegal.

But the arbitration has cast a shadow on the Kurdish region's reputation as a business-friendly alternative to the rest of Iraq.

Sharjah-based Dana Gas said it hoped to resolve its disagreement with the KRG "amicably and in good faith, in the shortest possible time".

Dana Gas and its partners - the UAE's Crescent Petroleum, Austria's OMV, and Hungary's MOL - continue to produce 80,000 barrels of oil equivalent a day.

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