Crescent Petroleum held the world record in the early 1990s for drilling the world’s deepest short radius horizontal well and the deepest slim hole to be cased by expandable casing. Crescent Petroleum also set a regional operational record in completing the complex Mubarek K2 well, with a highly challenging programme involving horizontal drilling combined with coiled tubing technology and a complex completion matrix at great depths.
Crescent Petroleum also takes pride in its reputation for agility, operational excellence and ability to bring fields on-stream in record time, while diligently maintaining strict cost efficiency. The Mubarek field discovery wildcat was drilled in 1972, with field development being put on fast track mode and completed in a record period of 13 months from the discovery confirmation well, to full production at a rate of over 60,000 bopd. This set a world record for the time of the time taken to bring an offshore field on-stream from first discovery.
In the Kurdistan Region of Iraq (KRI), Crescent Petroleum along with its affiliate Dana Gas, entered into a Strategic Alliance Protocol with the Kurdistan Regional Government in 2007 to appraise, develop, process, market and sell petroleum from the Khor Mor and Chemchemal gas fields. The first phase was to provide natural gas supplies to fuel two major domestic electric power generation plants being built in Erbil and Chemchemal, as well as for local industries and export. First gas production from Khor Mor and delivery to two local power stations commenced in October 2008, 18 months after contract signature in April 2007.
In 2009, Pearl Petroleum was founded as the company assigned with the interests of its joint operators, Dana Gas and Crescent Petroleum. Later that year, OMV of Austria and MOL of Hungary, two major European energy companies, each became 10% shareholders in Pearl Petroleum. Then in 2015, RWE joined the Pearl Petroleum consortium, acquiring 10% interest. In the ensuing decade, the project has delivered uninterrupted, affordable energy at scale to the KRI, making a considerable impact on the region’s economy, society, and environment. Capital investment in the project’s infrastructure and day-to-day operations has sustained significant economic activity in the KRI. Ultimately, the project’s most significant economic contribution, by far, is the gas provided to fuel the KRI’s electricity grid.
Production reached approximately 110,000 barrels of oil equivalent (BoE) per day at the end of 2023, comprising gas, condensate, and liquefied petroleum gas (LPG) with gas comprising nearly 78% of total production from the Khor Mor plant. Total production since inception in 2007 to the end of 2023 is approximately 446 million Barrels of Oil equivalent, with total capital investment amounting to $3.2 billion during the 16-year period.
During 2019, Pearl Petroleum signed a 20-year Gas Sales Agreement (GSA2) with the Kurdistan Regional Government of Iraq (KRG) to provide much needed gas supplies to support domestic electricity generation. In early 2020, Exterran, a leading oil and gas services provider (who was subsequently acquired by Enerflex in October 2022), was appointed to carry out the Engineering, Procurement and Construction (EPC) of a 250 MMSCFD gas processing train and provide operations related technical assistance services post hand over of the plant (the KM250 project).
Declarations of force majeure were made under the EPC contract and GSA2 over the past few years firstly due to the COVID-19 pandemic in early 2020, and then following various security related incidents, the latest being on 26 April 2024 wherein a drone strike took place which resulted in four fatalities and eight minor injuries to onsite personnel.
On 1 May 2024, based upon concrete actions which have been taken by the Government of Iraq and the Kurdistan Regional Government to significantly strengthen defences at the Khor Mor site as well as firm commitments from the highest levels of those authorities, Pearl Petroleum took steps to recommence production from the Khor Mor field which was fully restored to normal levels on 3 May 2024.
The aforesaid challenges faced by Pearl Petroleum have impacted the works on the KM250 project. The main EPC contractor has declared Force Majeure thus delaying completion of the KM250 project. On 19 August 2024, Pearl Petroleum announced that it had formally issued a notice of termination to Enerflex, following numerous performance issues which have arisen during the execution of the contract works. The ongoing impact of these performance issues has materially affected Enerflex’s ability to meet its contractual obligations, leading to unacceptable delays and hindering the progress and timely completion of the Khor Mor gas expansion project (KM250) in the Kurdistan Region of Iraq (KRI). As a result, Pearl Petroleum has been compelled to intervene directly to ensure the timely and successful completion of the project.
To safeguard the interests of Pearl Petroleum, its stakeholders and the people of the KRI, the company has taken the necessary step of issuing this notice of termination. This action will enable Pearl Petroleum to assume direct control over the remaining phases of the project, ensuring that it is brought back on track and completed in a timely manner.
Concerted efforts are in-hand to establish a new timeline and completion date for the project including careful consideration of multiple external factors. Crescent Petroleum and its partners in Pearl Petroleum are committed to the resumption of construction activities by Pearl Petroleum as safely and swiftly as possible.
In 2023, we marked a significant development milestone by signing two 20-year contracts with the Midland Oil Company for the Khashim Ahmer-Injana and Gilabat-Qumar fields in Diyala governorate, and another with the Basra Oil Company for the Khider Al-Mai field exploration in Basra governorate.
Between October and December 2023, the Ministry of Oil activated these contracts, and we have commenced development in the Khashim Ahmer-Injana block, with plans to explore and drill in the Khider Al-Mai block. The new blocks significantly expand our operational footprint, making us the largest upstream operator in Iraq by field count and area.
As we progress, we are committed to achieving up to 90% Iraqi employment in our operations and will initiate social performance projects for training, education, and social services in Diyala and beyond to support the communities where we will operate.