The Kurdistan Gas Project was established in 2007 when 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 in the Kurdistan Region of Iraq (KRI).
The government benefited from having a stable supply of gas for power generation in the region. Production from the gas processing plant in Khor Mor and the 180 km pipeline supplies gas to power stations in Chemchemal, Bazian and Erbil now generating over 2000 MW of electricity. Production from these newly built facilities began in October 2008 within 15 months from project initiation, an industry record. In 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as shareholders (initially 50%, now 35% each), since when OMV, MOL, and RWE have joined, purchasing a 10% share each.
The Kurdistan Gas Project was the first time that an international oil and gas company had begun producing gas in the KRI. To date, all of the gas produced by the Company has been used for in-country power generation, providing affordable electricity in the KRI. In addition, the Khor Mor Plant also produces Natural Gas Liquids (NGL, or gas condensate) and Liquified Petroleum Gas (LPG), which are sold to the Kurdistan Regional Government (KRG) and local traders respectively. Originally the Khor Mor Plant produced around 300 MMscf/d but as a result of the debottlenecking project concluded in October 2018 the daily rate has increased to around 400 MMscf/d together with 15,000 bpd condensate and over 1,000 MT/d of LPG.
By early 2012, Pearl Petroleum had invested around $1 billion in the region, rising to $1.6 billion by early 2019. This investment has allowed Pearl to produce 260 million barrels of oil equivalent (boe), resulting in over $20 billion of fuel cost savings and other economic benefits for the KRI. Further investment is underway to expand production from the initial 300 MMscf/d up to 900 MMscf/d by 2023, together with associated liquids.
Full-time operational staff now numbers over 600 with over 80% staff being local nationals. Local staff are being trained in order to increase this figure further. The Company has also contributed directly to local communities, supplying local power, education and healthcare facilities, as well as sponsoring support programmes for internally displaced people in Iraq.
An independent external reserves audit report by Gaffney Cline Associates (GCA), completed on behalf of Pearl Petroleum, in May 2019 showed that the total share for Dana Gas (35% shareholder in Pearl Petroleum), is equivalent to 1,087 million barrels of oil equivalent (MMboe), up from 990 MMboe when GCA first certified the fields in April 2016. This confirms that the fields located in the KRI could be the biggest gas fields in the whole of Iraq. The reserves were boosted in part by the booking of oil reserves in the Khor Mor Field for the first time.
GCA’s most recent report confirmed that Dana Gas’s share of the Khor Mor and Chemchemal 2P reserves was 4.4 trillion cubic feet gas (2016: 5.3 Tcf), 136 million barrels of condensate (2016: 109 MMbbls), 13.3 million metric tonnes LPG and 18 MMbls of oil, the equivalent of 1,087 MMboe, as compared to 990 MMboe in April 2016.