<article><p class="lead">The Kurdistan Regional Government (KRG) is looking to take advantage of the recent jump in oil prices to pay down some of its accrued debts to foreign oil companies operating in the semi-autonomous region of northern Iraq.</p><p>Abu Dhabi-listed Dana Gas said today it received a payment proposal from the KRG to pay down past receivables during 2021, as long as benchmark Brent crude remains above $50/bl.</p><p>Front-month Ice Brent crude futures have held above $50/bl since 10 December, reaching as high as $52.23/bl on 18 December. This is the highest level since March. </p><p>The company has outstanding invoices with the KRG from December 2019 to February 2020 totalling $30mn, although it has been receiving regular monthly payments from the KRG since March. </p><p>Other foreign oil firms operating in the region such as [Norwegian independent DNO]( https://direct.argusmedia.com/newsandanalysis/article/2127882) are also owed deferred payments. DNO is owed more than $200mn. </p><p>Erbil has struggled for months to pay public salaries on time or in full because of the collapse in oil prices earlier this year, and reduced payments from the federal government in Baghdad. The KRG's monthly oil revenues have averaged $375mn in 2020, down by almost half on the year, Argus estimates, with a knock-on effect on funding from Erbil for the oil and gas sector. </p><p>Dana also said it had hit its highest ever gas production level on 15 December, reaching 430mn ft³/d at the Khor Mor gas plant. Fourth quarter gas production as of 15 December 2020 averaged 400mn ft³/d, up 8pc compared to 370mn ft³/d in Q4 2019, Dana said.</p><p>It has also resumed work to expand output from the field after delays due to border closures and the restrictions due to the Covid-19 pandemic, which pushed the contractor to declare [force majeure]( https://direct.argusmedia.com/newsandanalysis/article/2163116).</p><p>The field is operated by the Dana-led Pearl Petroleum consortium, which includes Sharjah-based Crescent Petroleum, Austria's OMV, Hungary's Mol and Germany's RWE. The group plans to add two new gas processing plants (GPP) at a cost of $700mn, to boost Khor Mor output to 650mn ft³/d (6.69bn m³/yr) and then to 900mn ft³/d.</p><p>Dana expects to complete the first 250mn ft³/d GPP in Q1 2023. It had planned to have the first GPP on stream by 2021, and the second by 2022. </p><p>Output from the first of the new GPPs will probably be used domestically, by the KRG. But since the KRG is unlikely to absorb any more of the output, gas from the second train would have to be exported. Turkey is the most likely destination, sources close to project said.</p><p class="bylines">By Adal Mirza</p></article>
