Iraq's Kurdistan Regional Government (KRG) said on Thursday that Dana Gas (DANA.AD) and Crescent Petroleum had breached their contractual obligations by starting natural gas supplies from the Khor Mor field to Iraq's electricity ministry without its approval.
The KRG said the companies had informed it on Tuesday that they had begun supplying gas to the ministry, but that it received the notification only at the same time as the companies' public announcement. It said the move was taken unilaterally and outside the contractual framework governing the Khor Mor project.
Dana Gas and Crescent Petroleum said on Tuesday they had begun supplying 100 million standard cubic feet per day of natural gas from the Khor Mor field in Iraq's Kurdistan region to Iraq's Ministry of Electricity for one year. The companies said the gas would be supplied to the Kirkuk power station to support electricity generation.
The KRG said it had never opposed supplying gas or electricity to any part of Iraq, provided such arrangements were made in full compliance with the contractual framework governing the project and with the approval of the regional government as the contracting party.
"The unilateral decision by the companies to commence gas supplies without the approval of the Kurdistan Regional Government and outside the contractual framework governing the Khor Mor project constitutes a breach of their contractual obligations," the KRG said.
The regional government said the move also represented "unwarranted interference" in institutional arrangements governing relations between Erbil and Baghdad, at a time when the KRG and the federal government had made significant progress in energy-sector cooperation.
The KRG said the companies' actions were particularly disappointing because Erbil had repeatedly requested additional gas supplies for facilities facing higher demand, including plants in which the regional government had invested significant public resources.
The KRG rejected the companies' statement thanking it for supporting the gas supplies, saying it had neither approved nor authorised the move, and said it was reviewing legal and contractual options to protect its rights under the Khor Mor project.
The Khor Mor field is one of the Kurdistan region's most important gas assets and supplies fuel for power generation. The new supplies to Kirkuk come as Iraq grapples with persistent electricity shortages, particularly during peak summer demand.
The KRG, which exercises autonomy in northern Iraq, said it remained committed to working with the federal government to increase gas production and power generation through mutually agreed arrangements that comply with existing contracts.
