180km pipeline to meet local power needs implemented in record time
US$650 million investment the largest private-sector project in Iraq today
Dana Gas PJSC, the Middle East’s first regional private-sector natural gas company, and its partner Crescent Petroleum, the Middle East’s oldest private oil and gas company, have today announced the start-up of natural gas production, processing and transportation by pipeline in their major joint project in the Kurdistan Region of Iraq.
Dana Gas and Crescent Petroleum are 50:50 partners on the project, and are investing US$650 million under a Strategic Alliance and service contracts signed with the Kurdistan Regional Government (KRG) in April 2007, making it the largest private-sector investment in Iraq today and the largest private-sector oil & gas project in Iraq in several decades. The gas will supply new power plants under construction near Erbil and Sulaimaniya, which will provide eventually 1,250 MW of urgently needed electricity for over 4 million Iraqi citizens. This will provide Iraq with savings of approximately $2.5 billion a year in liquid fuel import costs.
As part of the project implementation, the primary phase completed in a record time of 15 months, the companies have installed a 180km gas pipeline across challenging mountainous terrain that sometimes required the clearing of minefields. In addition, upstream activities on seismic surveys and production wells were carried out, and brand new gas processing facilities were installed. The initial primary phase gas production is at 75 million cubic feet per day, and will rise in stages to 300 million cubic feet per day within the first half of 2009, as the power plants become fully operational. Dana Gas and Crescent Petroleum will be adding further processing capacity to handle the additional gas quantities.
In total, over 50,000 tones of equipment were imported in over 2,300 truck-loads, and over two thousand Iraqi workers from all ethnic groups and sects worked together in implementing the project, supported by expatriate workers from over 20 nationalities in the region and worldwide. The pipe material was supplied from China and Thailand, and the state-of-the-art gas processing plant was imported from the USA. Local private companies with Turkish partners were used as contractors in order to maximize local content and develop local experience and expertise.
In addition to their investment and work on the project, Dana Gas and Crescent Petroleum partnered with local charitable foundations to invest in community projects and development, including providing school supplies, drinking water treatment, electrical generators for distant villages, fuel for generators, mobile medical units, and youth sports facilities, as part of the Companies’ corporate social responsibility programme.
Commenting on the achievement, Mr. Ahmed Al-Arbeed, Upstream Executive Director for Dana Gas, said: “We are very proud of this historical milestone, as the first companies from the Middle East to invest in Iraq’s oil and gas sector. We wish to thank the leadership and cooperation shown by the KRG, and also all of our staff, our contractors, and local officials for their support in this remarkable joint effort.”
“This is the first project of its kind in Iraq, and it will provide important economic and social benefits for the Kurdistan region and all of Iraq”, added Mr. Majid Jafar, Executive Director Crescent Petroleum. “We aim to now build on these achievements in the Kurdistan Region and across Iraq, with our strategic focus on maximizing economic benefit and addressing local needs.”
In parallel with supplying the local power plants, Dana Gas and Crescent Petroleum are also in discussion with the Ministry of Natural Resources in the Kurdistan Regional Government of Iraq to review the natural gas resources in the Kurdistan Region of Iraq for its optimal development and utilization. To this end, the companies continue to assist the Ministry of Natural Resources to create a broad investment framework to develop the “Kurdistan Gas City” project – a major gas-utilization industrial complex to promote investment in a variety of gas-related industries to maximize local economic benefit and job creation. The investment framework shall encourage local private sector involvement and to attract investments by regional and international companies, which Dana Gas and Crescent intend to participate in.
(Dana Gas Press Release)
