Iraqi government considers gas purchase amidst attacks on Khor Mor field and political tensions

21 days ago
Iraqi government considers gas purchase amidst attacks on Khor Mor field and political tensions

Amidst yet another unfortunate attack on the Khor Mor gas field in the Kurdistan region, the Iraqi government is exploring the option of procuring gas from this source.

The Khor Mor gas field, established by Dana Gas of the UAE, is a crucial energy source for nearly 80 percent of the power plants in the Kurdistan region. Unfortunately, a recent drone attack caused a disturbance, according to local electricity authorities, resulting in a substantial loss of 2,500 megawatts of electricity.

Tragedy struck the Khor Mor gas field in Sulaimaniyah province on 26 April when a suicide drone attack resulted in the loss of four Yemeni nationals and left two others wounded. In a disturbing development, the field was targeted once again late on Monday night by two suspected drones. Kurdish guards swiftly reacted by firing machine guns towards the incoming threats, as revealed by a credible source speaking to The New Arab under anonymity.

Despite the attacks, the Iraqi government reportedly aims to purchase gas from the field without the consent of the Kurdistan Regional Government (KRG), seeking approval solely from the ruling Patriotic Union of Kurdistan (PUK), the de facto ruler in Sulaimaniyah province.

The source emphasised that procuring gas locally from the gas field entails lower costs than importing it from neighbouring Iran.

In response, the KRG’s Natural Resources Ministry emphasised on Wednesday that gas extracted from the Khor Mor field cannot be traded without prior approval from Erbil. This announcement comes as the Iraqi government recently approved plans to supply gas from the field to a power plant in Kirkuk during a cabinet session on Tuesday.

The Natural Resources Ministry reiterated that as per the contract with Pearl Petroleum, gas from the field is reserved for the Kurdistan Region’s electricity sector. “Any volume of gas produced must not be distributed without the express consent of the Kurdistan Regional Government,” the ministry stated.

US sanctions targeting Iranian oil and gas have hindered Iraq’s ability to make payments for these imports, resulting in substantial arrears. In response, Iran has frequently retaliated by intermittently cutting off gas supplies.

According to Dana Gas, the Khor Mor gas field produces over 500 million standard cubic feet of gas per day, serving as the primary gas source for power plants in the Kurdistan Region. However, pro-Iran militia factions have intermittently targeted the field, causing disruptions in electricity generation.

This development comes at a critical time for Dana Gas, which secured US$250 million in financing from the US International Development Finance Corporation in September 2021 to expand gas production at the Khor Mor plant. However, the recent suspension of operations poses challenges to meeting project timelines.

Enerflex, overseeing the expansion project, has withdrawn all staff and suspended operations following the drone attack. Similarly, nearly 3000 workers from the Turkish subcontractor, Biltek company, have been withdrawn. Efforts to obtain comments from Dana Gas and Biltek companies were unsuccessful at the time of this report.

Despite the setbacks, both companies remain vigilant and are eager to resume operations once security conditions improve. However, the exact timeline for resuming operations remains uncertain. While the expansion project itself was not directly affected by the drone attack, delays may occur due to the suspension of operations at a nearby gas-collecting facility.