A consortium led by Emirati firm Dana Gas is prepared to get a Turkish court to seize assets belonging to the Kurdistan Regional Government in Iraq and enforce an arbitration claim, according to a source with knowledge of the company's plans.
Dana Gas and its consortium partners recently brought an arbitration claim against the KRG in London to clarify the amount of money they believe they are owed for work already carried out on Kurdistan gas fields and on their rights to develop and market gas fields further.
As the KRG recently signed a multi-billion dollar agreement to export oil to Turkey, Dana and its partners told creditors recently that they will keep open the option of enforcing a claim in a Turkish court to seize oil products from Kurdistan until its receivables are met, the source said.
That eventuality may arise if the arbitration claim is awarded in favour of the consortium but the KRG refuses to abide by the decision.
"Turkey is a signatory to the New York Convention," the source said, referring to the convention that applies to the recognition and enforcement of foreign arbitral awards.
"So in theory if KRG refuses to play ball, Dana could get Turkey to seize any imports from Kurdistan until the terms of the arbitration are met," he said.
Dispute
The Dana Gas-led consortium, called Pearl Petroleum, first signed a contract with the KRG in 2007 to develop the Khor Mor and Chemchemal fields. The consortium has since been producing gas for the KRG's power plants.
However, payments from the regional government were delayed on occasion and eventually stopped altogether, the source said. The consortium attempted to resolve the issue through formal mediation earlier this year, but the KRG declined to engage in this process, Dana Gas said in a statement on October 22.
The KRG responded by stating later the same day that there are no outstanding receivables owed by the KRG to Dana or Dana's affiliates.
"It is Dana and its affiliates that owe the KRG significant sums," the KRG's foreign ministry said in a statement on October 22, and added that Pearl Petroleum is "not recognised by the KRG".
Pearl Petroleum did not respond to requests for comment. The KRG's ministry of natural resources declined to comment.
