UAE’s Dana Gas wins favourable ruling in Kurdistan dispute

Dana Gas, one of the largest oil and gas investors in Iraqi Kurdistan, said on Sunday it had obtained a favourable ruling from a London arbitration tribunal in its dispute with the autonomous region’s authorities.

The Abu Dhabi-listed firm, which leads a consortium of investors, had filed an arbitration case in London in October 2013 against the Kurdistan Regional Government (KRG), seeking to confirm its contract rights and obtain payments for products it had delivered.

The consortium also includes Crescent Petroleum of the United Arab Emirates (UAE), Austria’s OMV and the Hungarian oil and gas group MOL.

On July 2, the London Court of International Arbitration “handed down its partial final award ruling confirming beyond any doubt the consortium’s contractual rights”, Dana said in a statement on Sunday.

Kurdistan’s Ministry of Natural Resources however described Dana’s statement as “highly misleading to the market” and said it created an impression that was “both inaccurate and incomplete”.

According to Dana, the tribunal confirmed the consortium’s long-term rights to develop and produce gas and petroleum products from the Khor Mor and Chemchemal fields for the duration of the contract, or not less than 25 years. These rights had been disputed by the KRG since May 2009, preventing development of the fields, the company added.

The tribunal also confirmed the KRG’s obligation to pay the consortium for condensate and liquefied petroleum gas (LPG) at international prices, and set a Sept. 21 date to decide on the consortium’s claim for outstanding payments from the KRG totalling $1.943 billion as of end-May 2015, Dana said.

Responding to Dana’s statement, the KRG said the tribunal had so far only addressed a limited number of issues of contractual interpretation, and was yet to make any monetary award in favour of any party.

“The KRG has incurred significant damages as a result of the failure of Dana and its principals to honour their obligations, and will continue vigorously to pursue its claims for damages and other relief against both Dana and its principals in all appropriate fora,” it said.

The case is closely watched by other companies active in Kurdistan, whose untapped oil and gas reserves and lucrative production-sharing contracts have attracted major international oil companies in recent years.