Dana Gas achieves 50% Gas Production Growth in 3 yrs

Dana Gas and its partner, Crescent Petroleum, have reported record sales gas production from their operations in the Kurdistan Region of Iraq (KRI), reaching 452 million cubic feet of gas per day (MMscf/d) at the end of 2021.

The production milestone is the culmination of numerous process improvements at the Khor Mor gas plant, including a bypass project completed in 2020 as well as a de-bottlenecking programme earlier in 2018. Together, the process improvements have grown the production by 50% from 305 MMscf/d in 2018.

Dana Gas and Crescent Petroleum jointly operate the Khor Mor and Chemchemal gas fields on behalf of the Pearl Petroleum consortium, supplying the gas which enables much needed electricity generation in the KRI, and also producing close to 16,000 barrels of condensate and 1,000 tonnes of LPG per day. The successful process improvements will be reinforced by the KM250 expansion project at the plant which is currently under implementation, and will increase total capacity by an additional 55% to 700 MMscf/d by April 2023.

Major works for the US$630 million KM250 expansion project resumed in April, 2021 after a delay of one year due to the COVID pandemic. The project is now on track for the new target start date of April 2023. As part of the expansion works, the Company is also preparing to drill up to five development wells, which are scheduled to commence production in March 2022.

The KM250 Gas Expansion Project is supported by a $250 million financing agreement for 7 years with the U.S. International Development Finance Corporation (DFC) which was announced in September 2021. After completion of the KM250 project, the partners also plan a further KM500 train that would raise production to almost 1 billion cubic feet per day to meet rising demand for cleaner burning natural gas and electricity generation in the Kurdistan Region and all of Iraq.

Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, said:

"The achievement of this production milestone underscores the progress we continue to make at Khor Mor to meet the rapidly growing demand for natural gas in the KRI. Despite the challenges the whole world has faced over the past two years, we are proud to have continued delivering uninterrupted supply of clean-burning natural gas to support the KRI economy and enable a healthy recovery. Meanwhile our major expansion plans at the Khor Mor and Chemchemal fields to target 1 billion cubic feet per day in the coming few years will enable improved services across the region for years to come."

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, said:

"This milestone is testament to our people and their hard work making consistent production growth possible at our Khor Mor gas plant. Our continued investments since 2018, notably the Khor Mor de-bottlenecking and bypass projects, have allowed us to deliver reliable supplies of clean energy to support the KRI economy and its people, with enhanced economic and environmental benefits which will increase as we further grow production."

Total investment by the Pearl Petroleum consortium exceeds US$2.3 billion to date, with total cumulative production of over 360 million barrels of oil equivalent (boe) of natural gas and liquids. The uninterrupted supply of gas to power plants in Erbil, Chemchemal and Bazian provides over 80% of the KRI's power generation and has resulted in significant fuel cost savings through substitution of diesel representing both environmental and economic benefits for the Kurdistan Region and Iraq as a whole.

The displacement of diesel fuel for power generation in the KRI with gas has also enabled emissions savings of 42 million tonnes of CO2, thereby making a major contribution to reducing greenhouse gas emissions and reducing local air pollution in the region as well as supporting the transition to better energy sources to tackle global climate change.

(Source: Dana Gas)

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KRG issues new COVID-19 regulations

The Kurdistan Region's High Committee for Combating COVID-19 met on Tuesday and issued the following directives as part of the Kurdistan Regional Government's efforts to curb the spread of the pandemic:

  1. The vaccination deadline for public service employees (civil and military) will be extended to 20 January 2022. Any employee who fails to adhere to the directives will face disciplinary measures according to general health laws.
  2. COVID-19 tests will be administered at border crossings to people entering the Kurdistan Region, including those with COVID-19 Vaccination Cards. Entrance will only be given to those who can provide a negative result from a valid COVID-19 test taken within 48 hours of arrival.
  3. The Ministry of Endowment and Religious Affairs will issue special regulations regarding funerals in the Kurdistan Region, in coordination with relevant administrations.
  4. Tourist groups must provide negative results from a valid COVID-19 test within 48-hour of arrival or present valid Vaccination Cards.
  5. All citizens, regardless of their vaccination status, must wear a mask when indoors for any public space (e.g., Government offices, businesses, restaurants, banks, and others) and adhere to social distancing regulations.
  6. Starting 1 February 2022, entrance to public spaces (e.g., Government offices, stores, restaurants, malls, event halls, businesses, and others) will be denied to those who cannot produce a negative result from a valid test taken within the past 48 hours or a COVID-19 Vaccination Card.

(Source: KRG)

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Genel Suspends Drilling Ops on QD-2 well at Qara Dagh

Genel Energy has announced that drilling operations on the QD-2 well at Qara Dagh (40% working interest and operator) have been suspended.

As previously stated, the well had been side-tracked in response to encountering more complex geology above the target reservoir than expected.

Two further side-tracks have been initiated, but the licence partners have now concluded that it is impractical to continue the drilling operations from this wellbore in an attempt to reach the primary objective because of insurmountable technical problems. The decision has therefore been taken to suspend QD-2, with the minimum work obligation satisfied.

Licence partners Genel and Chevron will conduct a thorough evaluation of the QD-2 well and its results in 2022 to inform next steps on the licence.

Bill Higgs, Chief Executive of Genel, said:

"This has been a very challenging operation, and the decision to suspend drilling at this stage is prudent. It is of course not the outcome that we wanted, but the geological case for Qara Dagh remains intact and attractive.

"We will work with Chevron to ascertain the best way forward on the licence. In the meantime we will continue working with the community on our social initiatives, as we retain our commitment to the region."

(Source: Genel Energy)

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Results of Iraq Women Integrated Social and Health Survey

Ministry of Planning, UNFPA launch results of the second Iraq Women Integrated Social and Health Survey

The Ministry of Planning, the Central Statistical Organization and UNFPA have launched the results of the second Iraq Women Integrated Social and Health (IWISH) survey, conducted in collaboration with the Ministry of Planning at the Kurdistan Regional Government - Kurdistan Region Statistics Office and with funding from Sweden.

The survey addresses women issues throughout all ages and covers various sectors such as women empowerment, health, reproductive health, violence against women and other relevant social and health dimensions to establish a comprehensive database.

It offers integrated data that identifies the progress made and the gaps in the economic, social, and health situation of women in Iraq in comparison to the results of IWISH I, conducted ten years ago.

Speaking at the event, Dr Maher Johan, Deputy Minister of Planning, emphasised the importance of data and statistics in programming and policy development, reiteration the Ministry's determination to conduct the Population & Housing Census before the end of 2022:

"Evidence-based policies are the only way for us to achieve our commitments to the International Conference on Population & Development in Nairobi and achieve the Sustainable Development Goals".

Dr Rita Columbia, UNFPA Representative to Iraq, commented on the survey, saying:

"UNFPA will continue to provide technical assistance in collecting, analysing and using reliable population data to ensure girls and women's rights and needs are a priority for the Government of Iraq. The findings will enable the development of people-centred policies enabling women to have equal opportunities and exercise their reproductive rights".

Highlights of the IWISH results can be found through this link and presentation in Arabic.

(Source: UN)

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GKP “on Track” to Meet Production Guidance

Gulf Keystone has provided an operational and corporate update:

Jon Harris, Gulf Keystone's Chief Executive Officer, said:

"We are pleased to announce that we have submitted a draft Field Development Plan to the Ministry of Natural Resources. While the timing of FDP approval is uncertain given the scale of the project, this is an important step forward to develop the significant potential of the Shaikan Field while more than halving CO2 per barrel by eliminating routine flaring.

"Production performance has been strong, reaching a record monthly average high in October, and we are on track to meet our tightened 2021 gross average production guidance. With our leverage to oil prices and low cost base, strong production has translated into robust cash flow generation. We have experienced operational challenges with SH-13 and SH-14 and, subject to well productivity, we are now targeting to increase gross production towards 55,000 bopd in January."

Shaikan Field Development Plan ("FDP")

  • Following extensive constructive engagement with the Ministry of Natural Resources ("MNR"), Gulf Keystone and its partner Kalegran B.V. (a subsidiary of MOL Hungarian Oil & Gas plc) ("MOL") have submitted a draft FDP to the MNR
  • The FDP includes the continued ramp-up of Jurassic oil production , an appraisal of the Triassic reservoir and a Gas Management Plan to more than halve CO2 per barrel by eliminating routine flaring
  • The FDP is subject to review and final approval by the MNR, the timing of which is uncertain given the scale of the project. Final investment decision ("FID") is also subject to approval of both Boards of Directors of Gulf Keystone and MOL, and the Company will provide an update at the appropriate time

Operational

  • Following over 660 days without a Lost Time Incident ("LTI"), we were disappointed to have an LTI during drilling operations in October. Following the incident, we have completed a full investigation and have put in place a number of remedial actions
  • Gross average production from the field in 2021 to date of c.43,300 bopd, in line with tightened 2021 guidance, with record gross average production in October of 45,654 bopd
  • SH-14 has been drilled, completed and is currently being hooked-up , following delays caused by equipment failures and wellbore issues in the subsequent side-track
  • Following the rig move from the SH-13/SH-14 well pad, an acid stimulation programme is now underway on SH-13 to access the broader fracture network in the reservoir after an area of low fracture connectivity was encountered. Acid stimulation is commonly used in carbonate reservoirs such as Shaikan
  • Activities are ongoing to start production from SH-13 and SH-14 and the increase in gross production towards 55,000 bopd, subject to well productivity, is now expected in January
  • Preparations are ongoing to spud SH-15 (formerly referred to as SH-G) which is now expected to be brought onstream in Q2 2022
  • Planned installation of two electric submersible pumps deferred to 2022 after successful trial of lower cost jet pump solution at SH-10 and stronger than expected SH-11 reservoir performance

Financial

  • $283.2 million ($221.7 million net to GKP) received from the Kurdistan Regional Government in 2021 to date for payments of crude oil sales and recovery of outstanding arrears. $32.4 million of the original total net arrears balance of $73.3 million has now been recovered
  • The delayed payment for September 2021 crude oil sales and arrears (gross: $37.8 million; net to GKP: $29.6 million) is expected to be paid shortly
  • Following the payment of the $50 million interim dividend on 8 October 2021, $100 million of dividends have been distributed to shareholders in 2021, in line with the Company's strategy of balancing investment in growth with shareholder returns
  • Robust balance sheet, with a cash balance of $176 million as at 16 December 2021

Outlook

  • On track to meet tightened 2021 average gross production guidance of 42,000 to 44,000 bopd
  • 2021 net Capex guidance lowered from $75-$85 million to approximately $55 million, principally due to the revised spud date of SH-15 and deferral of installation of SH-10 and SH-11 electric submersible pumps, partially offset by the higher cost of SH-14
  • 2021 gross Opex guidance of $2.5 to $2.9/bbl remains unchanged
  • With continuing strong oil prices and cash flow generation, there may be opportunities to consider further distributions to shareholders and to optimise the capital structure

AGM update

At the Company's Annual General Meeting ("AGM") held on 18 June 2021, all resolutions were successfully passed. However, resolutions 2 and 6, being the re-election of the Company's Chairman and Chief Financial Officer, failed to attain the support of 80% of the shareholders who voted. Voting turnout in general was low relative to prior years, with approximately 49% of the total shareholder register voting. The Company continues to look at ways to increase voting turnout at future general meetings.

Substantially all the votes against resolutions 2 and 6 were from a single major shareholder. In accordance with Provision 4 of the 2018 UK Corporate Governance Code, the Board has consulted with the single shareholder, and, as part of this exercise, also consulted with the Company's other major shareholders.

Feedback received from the single shareholder encompassed issues principally related to the Company's operational progress, organisational structure and capital allocation. The Company also received feedback from other major shareholders, all of which were supportive of resolutions 2 and 6. The Board has carefully considered the issues and has addressed them, to the extent possible or necessary. The independent members of the Board continue to hold every confidence in both the Chairman and Chief Financial Officer, recognising the value and contribution each bring to the Company.

The Company will continue to engage with the major shareholder in question and welcomes ongoing engagement and feedback from all shareholders.

(Source: GKP)

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KRG hits back at Genel Energy Claims

By John Lee.

The Kurdistan Regional Government (KRG) has responded to the statement on Friday by Genel Energy regarding the production-sharing contracts (PSCs) at Bina Bawi and Miran.

The KRG strongly denies that it is in repudiatory breach of the PSCs, and denies that Genel is entitled to any compensation.

It adds that it will vigorously defend any claim that is brought by Genel, and intends to pursue its own counterclaims for damages resulting from Genel's renunciation of the PSCs.

The full statement from KRG follows:

On 10 December 2021, the Kurdistan Regional Government received a letter from a subsidiary of Genel Energy plc ("Genel"). In this letter, Genel confirmed that it did not intend to continue to perform its obligations under the Bina Bawi and Miran PSCs, and purported to terminate the PSCs with immediate effect. The Government understands that Genel Energy plc has made the same assertions in a public press release dated 10 December 2021.

Genel's letter and the related press release were prompted by the Government's issuance on 5 December 2021 of formal Notices of Termination, which validly terminated the PSCs subject only to the completion of the dispute resolution process set out in the PSCs.

Genel has sought to justify its termination of the PSCs by wrongly asserting that the Government is in repudiatory breach. The Government strongly denies that it is in repudiatory breach of the PSCs. Genel has also falsely claimed that the Government stated it would not perform its obligations under the PSCs. On the contrary, the Government has always acted in accordance with its obligations under the PSCs, and has consistently communicated the same to Genel.

However, Genel's 10 December 2021 communication confirmed unequivocally that Genel had renounced the PSCs, and the Government has therefore confirmed today to Genel that the PSCs are validly terminated with immediate effect.

The Government regrets that Genel has failed to offer any credible proposals to develop the Bina Bawi and Miran oil and gas fields, and notes that this failure has significantly delayed the ability of the Government to develop those fields on a timely basis.

The Government also notes Genel's public statement that it will pursue a substantial claim in international arbitration from the Government as a consequence of the termination of the PSCs. The Government strongly denies that Genel is entitled to any compensation. The Government will vigorously defend any claim that is brought by Genel, and intends to pursue its own counterclaims for damages resulting from Genel's renunciation of the PSCs.

(Source: KRG)

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Genel Energy to Claim Compensation from KRG

Shares in Genel Energy opened down more than five percent on Friday morning, before recovering some ground, after the company said it will claim compensation from the Kurdistan Regional Government (KRG).

It says the claims, which relate to KRG's intention to terminate the Bina Bawi and Miran production sharing contracts (PSCs) are "substantial", and will be brought in a London-based international arbitration.

The statement from the company this morning:

Genel Energy plc ('Genel') provides the following update on the Bina Bawi and Miran Production Sharing Contracts ('PSCs').

Further to Genel's announcement of 20 August 2021 that notices of intention to terminate the Bina Bawi and Miran PSCs had been received from the Ministry of Natural Resources of the Kurdistan Regional Government ('KRG'), Genel has received from the KRG formal notices purporting to terminate the PSCs. The KRG has also stated that, pending resolution of the dispute as to whether such notices are effective to terminate the PSCs, it will not perform those obligations under the PSCs that would enable Genel to progress the development of the Bina Bawi and Miran fields. 

Since entering into the PSCs in February 2017, Genel has made every effort to engage with the KRG on the development of the Bina Bawi and Miran fields and has submitted numerous development proposals to the KRG for its approval. However, the KRG has for some time made clear its intention not to permit the development of the fields in accordance with the terms of the PSCs.

In these circumstances, the Board has concluded that it is left with no practical alternative but to accept that the PSCs are terminated as a consequence of the KRG's repudiatory breach and to claim compensation from the KRG. Genel's claims are substantial and will be brought in a London seated international arbitration to be commenced in accordance with the disputes process set out in the PSCs.

Genel has a long and constructive relationship with the KRG, and continues to work with the KRG on the development of our other assets, as we look to deliver our mutual goal of increasing production in the KRI for the benefit of all stakeholders.

Genel will update the market on future developments.

Following the termination of the PSCs, the balances associated with holding title to these PSCs will be derecognised and therefore removed from the balance sheet.

(Source: Genel Energy)

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Deloitte Report on Kurdistan Region Oil and Gas

Deloitte report on Oil and Gas review in the Iraqi Kurdistan Region - Q1 and Q2 of 2021

The KRG has published the reports containing verified statistics covering the Kurdistan Region's oil exports, consumption and revenues for covering period 1 January 2021 to 30 June 2021.

During the first half of 2021, the KRG exported 77.35 million barrels through Kurdistan Export Pipeline. In addition, 3.95 million barrels were allocated to local refineries. Of the exported crude oil, 76.869 million barrels were lifted by the buyers from Ceyhan Export Terminal, at an average price of 53.446 $/bbl.

The KRG has generated revenues of USD 4.1 billion from crude oil export sales during the first half of 2021. After making payments to oil producers, pipeline operators, and repayments to the buyers, the KRG retained net revenues from crude oil sales of US$ 1.737 billion.

The KRG is has engaged in discussions with international buyers and oil producers in continuing its efforts to maximize sales prices and reduce production costs to maximize value for the people of Kurdistan.

Transparency is central to the cabinet's agenda. The report, available in Kurdish, English and Arabic, provides a quarterly analysis of oil export information and average prices which have been independently reviewed and verified by Deloitte.

The KRG acknowledges the positive feedback received from domestic and international stakeholders. The council reiterates its commitment to the people of Kurdistan that Deloitte will continue to independently review and verify the statistics of the Kurdistan Region's oil and gas sector.

A frequently asked questions handbook (also available in Kurdish, English and Arabic) has also been developed to help readers to understand the report's contents.

Click here to download the reports.

(Source: KRG)

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KRG PM meets President of the Iraq Britain Business Council

The Prime Minister of the Kurdistan Regional Government (KRG), Masrour Barzani, on Saturday met Baroness Emma Nicholson, President of the Iraq Britain Business Council (IBBC).

Prime Minister Barzani highlighted the reforms of the ninth cabinet, its bid to diversify the economy and crucially to make the Kurdistan Region a focal point for business.

Baroness Nicholson gave a briefing on the council's work, especially its last conference which was held in Dubai and which concentrated on developing UK, Iraq, and Kurdistan Region trade relations.

(Source: KRG)

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DNO reports Third Quarter 2021 Results

DNO ASA, the Norwegian oil and gas operator, today reported third quarter revenues of USD 253 million, a 38 percent quarter-on-quarter increase driven by higher North Sea sales and strengthening commodity prices.

The Company's operating profit climbed seven percent to USD 65 million, weighed down by non-cash net impairments of USD 40 million primarily related to revised Ula area cost and production profiles in the North Sea.

Cash flow from operating activities totaled USD 163 million in the third quarter. Net debt was reduced by USD 36 million to USD 360 million, the lowest level since 2018.

"Like much of the rest of our resilient industry, we are recovering rapidly from the early ravaging of the oil and gas markets by the runaway pandemic," said DNO's Executive Chairman Bijan Mossavar-Rahmani. "We are back delivering value to our host countries, shareholders and other partners in an efficient and responsible manner," he added.

Gross operated production at the Company's flagship Tawke license in Kurdistan averaged 105,200 barrels of oil per day (bopd) in the third quarter, of which the Peshkabir field contributed 59,900 bopd and the Tawke field 45,300 bopd. Of the total, 78,900 bopd were net to DNO. In the North Sea, net production averaged 13,100 barrels of oil equivalent per day (boepd), bringing the Company's total third quarter net production to 92,000 boepd.

DNO's USD 110 million Peshkabir-Tawke gas project, which was commissioned in mid-2020, has injected eight billion cubic feet of otherwise flared gas through the end of the third quarter, capturing 480,000 tonnes of CO2 equivalent. In September, the Company initiated a USD 25 million second phase of the gas capture project to reinject and retain gas in the Tawke reservoir and avoid flaring. Having already eliminated routine venting of methane in operations in 2019, DNO recently launched a leak detection and repair initiative to measure, monitor and mitigate fugitive methane emissions.

Elsewhere in Kurdistan, commerciality was declared on the DNO-operated Baeshiqa license and plans submitted for a fast-track development.

DNO's active North Sea exploration program notched up a success in the third quarter with appraisal drilling on the 2020 Bergknapp discovery (DNO 30 percent) resulting in a 35 percent upgrade of DNO's recoverable resource estimate. Also during the quarter, DNO made an oil discovery on the Gomez prospect (DNO 65 percent and operator). Due to uncertainty of producibility, no estimate of recoverable volumes has been established pending further analysis. Another third quarter 2021 appraisal well, Black Vulture (DNO 32 percent), was dry. Following the end of the quarter, the Mugnetind exploration well (DNO 30 percent) encountered limited hydrocarbons and is unlikely to be commercial.

The Brasse development (DNO 50 percent and operator) is on track for a 2022 project sanction with DNO recently entering into a strategic framework agreement with Technip FMC covering subsea deliveries (SURF and SPS).

During the third quarter, the Company completed the placement of USD 400 million of new five-year senior unsecured bonds with at a coupon rate of 7.875 percent, lowering DNO's average interest rate on its debt while extending the maturity profile.

A videoconference call with executive management will follow today at 15:00 (CET). Please visit www.dno.no to access the call.

(Source: DNO)

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