DNO International ASA will deliver gas starting in January 2014 from Summail field to a Dohuk electric power plant, the first commercial domestic gas sales agreement in the Kurdistan Region of Iraq.
The agreement with the Kurdistan Regional Government calls for initial deliveries of about 100 MMcfd on a take-or-pay basis for the duration of the Dohuk production-sharing contract or until deliveries reach 1 tcf. Price will range between $3/Mcf and $4/Mcf over the life of the contract.
The gas will help displace diesel used to generate electricity in a 500-Mw power plant in Dohuk city 40 km from the field.
The next step in Summail’s fast-track development is reentry and completion of the Summail-1 discovery well and the installation of a 24-in. pipeline to transport gas to what is slated to become the regional gas gathering and distribution network. A second well, Summail-2, is to spud in this year’s fourth quarter, and Summail-3 is set for 2014.
Following Summail field development, the company will shift its focus to appraise the oil potential of the Dohuk license.
DNO International has a 40% interest in and operates the Dohuk license. Genel Energy PLC has 40% and the KRG 20%.
Development of Summail field will help lower costs and grow and diversify DNO International’s production and revenue base, said Bijan Mossavar-Rahmani, DNO International’s executive chairman.