Iraqi government eyes gas purchase amid attacks on Khor Mor field and political tensions

The Iraqi government is considering purchasing gas from the Kurdistan region's Khor Mor gas field following another attack on the field this week.

The Khor Mor gas field, developed by the UAE's Dana Gas company, plays a vital role in supplying power to almost 80 per cent of the Kurdistan region's power plants. However, a recent drone attack led to disruption, as confirmed by local electricity authorities, resulting in the loss of 2,500 megawatts of electricity.

On 26 April, a suicide drone struck the Khor Mor gas field in Sulaimaniyah province, leading to the death of four Yemeni nationals and injuries to two others. Late Monday night, the field faced another attack with two suspected drones. Kurdish guards responded by firing machine guns towards the objects, according to a reliable source who spoke to The New Arab on condition of 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.

Kurdish security forces shoot at a drone flying above the Khor Mor gas field. pic.twitter.com/NfwEJxZwxv

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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.