Dana Gas Agrees Settlement With RWE Unit on Iraq Dispute

  • RWE Supply and Trading to get 10% share in Iraq Kurd venture
  • Dana Gas shares jumped as much as 11% in Abu Dhabi trading

Dana Gas PJSC reached an “amicable and mutually beneficial settlement agreement” with RWE AG’s trading unit to resolve a dispute over a venture in Iraq’s semi-autonomous Kurdish region, the United Arab Emirates-based energy producer said.

RWE Supply & Trading GmbH will take a 10 percent stake in the Pearl Petroleum venture, which produces natural gas in the Kurdish area of northern Iraq, according to a statement to the Abu Dhabi stock exchange Monday. Dana Gas didn’t disclose additional details of the settlement that brings arbitration between the two companies to a close.

Dana Gas, based in the U.A.E. emirate of Sharjah, produces gas mostly in Egypt and Iraq and is seeking to recover more than $1 billion in overdue payments from governments in those countries for fuel sales. RWE harmed the company’s interests in Iraq by breaching confidentiality agreements and causing a loss of value, Chief Executive Officer Patrick Allman-Ward said on Nov. 16. Dana Gas swung to a 28 million dirham ($7.6 million) quarterly loss this month after oil prices fell in the past year.

"This is a game changer for the Dana Gas story, given the expected size of the RWE cash settlement," Ghassan Chehayeb, the chief investment officer at Texas-based Sancta Capital Group Ltd., said by phone Monday.

"The combined amount that Dana and Crescent will receive would be between $1 billion to 1.5 billion,” he said, adding his estimate was based in part on provisions RWE had already taken for a potential settlement.

RWE reached a “full and definitive” out-of-court settlement with Dana Gas to resolve the dispute, including it taking the 10 percent stake in Pearl Petroleum, it said in an e-mailed statement. Provisions the company had taken for an award to Dana Gas largely covered any risks linked to the dispute, RWE said.

Shareholding Structure

Dana Gas shares gained as much as 11 percent in trading today before paring their gain to 2.1 percent, or 1 fil, to 48 fils as the Abu Dhabi market closed. The stock was suspended at the start of trading pending the announcement.

Dana Gas and its part-owner Crescent Petroleum each hold a 40 percent stake in Pearl Petroleum, the venture operating in the enclave controlled by the Kurdistan Regional Government, according to its corporate website. OMV AG and MOL Hungarian Oil and Gas PLC each hold stakes of 10 percent. The Dana Gas statement didn’t explain how the 10 percent share for RWE Supply & Trading would effect the venture’s overall shareholding structure.

In a separate arbitration case, Dana Gas said Sunday that a court ordered Iraq’s KRG to pay it and two other energy companies $1.98 billion in a dispute over development rights at two oil and gas fields.

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