MOL and OMV team up with Dana Gas and Crescent in Kurdistan region

<b><font size="4">of Iraq</b></font>

18/05/2009 00:00 AST

Partnership set to invest $8 billion in gas resource development and infrastructure; production potential of 3 BCF/day. Partnership based upon OMV becoming a 10 per cent shareholder in Pearl Petroleum in return for a payment of $350 million.

Dana Gas, the Middle East's first and largest regional private-sector natural gas company, and Crescent Petroleum, the region's oldest private exploration and production company, say they have entered into strategic partnership agreements with OMV, Austrias largest listed industrial company and a leading Central European integrated oil and gas group, and MOL Hungarian Oil and Gas Company, Hungary's largest listed company and also a leading Central European integrated oil and gas group, which they claim is set to transform the prospects for Iraq's gas industry to become a major and secure gas supplier to local, regional and European markets.

The partnership is said to be based upon OMV becoming a 10 per cent shareholder in Pearl Petroleum, the company which holds Crescent Petroleum and Dana Gas' upstream interests in the Kurdistan Region of Iraq, in return for a payment of $350 million, which in turn will be re-invested in the development of the project; and with MOL based upon around reciprocal shareholdings of their respective companies: MOL will become a 10 per cent shareholder in Pearl Petroleum and Crescent Petroleum and Dana Gas will each become three per cent shareholders in MOL, listed on the Budapest, Luxembourg and Warsaw Stock Exchanges.

"This arrangement unites the Middle East's leading independent E&P companies with two of Europe's most dynamic integrated oil and gas companies and the original architects of the Nabucco gas pipeline project," a press release said.

"These partnership agreements between the companies represents a significant vote of confidence in the investment policies and climate of the Kurdistan Regional Government of Iraq and illustrates the companies' strong belief in the growth potential of the Kurdistan Region of Iraq's natural gas assets to develop into one of the most significant gas export projects in the region within the next few years. In due course, this will establish Iraq as one of the region's major gas exporters, once local requirements have been met," it added.

Over the past two years Crescent Petroleum and Dana Gas have jointly invested $605 million in the successful fast-track development of the Khor Mor gas field and a local natural gas network, including construction of a 176km natural gas transmission pipeline in a "record time, efficiently enabling local gas-fired power generation plants to provide secure electricity supplies to over four million Iraqis", and reduce local oil consumption expenditure which in turn has led to savings in governmental fuel costs of approximately $2 billion per year.

The project partners said they will now push forward with substantial new investments in the Kurdistan Region of Iraq estimated to be in the order of $8 billion to further develop the companies' assets, and facilitate the provision of gas for increased Iraqi power generation capacity and encouragement of local Iraqi industry as a priority, and facilitating the subsequent exports of surplus natural gas into neighbouring countries, including Turkey and beyond into Europe, benefitting local, regional and European economies.

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