Dubai: Sharjah-based upstream energy explorers Dana Gas and Crescent Petroleum, and European energy exploration giants OMV and MOL have signed a partnership to invest up to $8 billion (Dh29.36 billion) in Iraq's energy-rich Kurdistan region that will help surplus gas to be pumped to Europe through the trans-continental Nabucco project.
Nabucco is a project linking Middle East and Caspian natural gas sources to Europe through a new gas transmission pipeline.
The project is currently planned to have a final capacity of about three billion cubic feet of gas per day, with completion of the first 1.5 billion cubic feet per day capacity phase around 2015.
This is one of the largest such initiatives in the region where two European rivals - Austria's OMV and Hungary's MOL - joined hands with two Middle Eastern energy giants - Dana and Crescent - in a possible Middle East-Central Asia-Europe energy supply network that will help to energy-hungry Europe secure gas from the Middle East.
These significant moves will help reduce Europe's dependence on Russian gas and in turn will make Europe less vulnerable to any future "energy shocks" and "arm-twisting exercises" by the former superpower, analysts say.
Dana and Crescent have also signed a separate deal with Hungary's MOL to develop more energy fields in the Middle East that will boost output and reinforce the Middle East's reputation as the world's largest supplier of energy.
The strategic partnership is expected to boost gas output in Iraq's long neglected northern Kurdistan province from the current 90 million standard cubic feet of gas per day to a potential 3 billion by 2014 and help meet the growing energy demand in the region and beyond.
"Our joint project in the Kurdistan Region now has the full potential of linking the region's significant gas reserves to Europe by pipe for the first time, after satisfying all local requirements of course," Badar Jafar, executive director of Crescent Petroleum, said.
As per the agreement, OMV is set to become a ten per cent shareholder in Pearl Petroleum - a company that holds Dana Gas's and Crescent Petroleum's upstream interests in Kurdistan region of Iraq - for $350 million. The amount is to be re-invested in Kurdistan's energy sector.
"With the planned investments, we are looking at lifting gas output to three billion standard cubic feet per day that will help meet the energy needs of the people of Iraq in the next seven years," Jafar told Gulf News in an interview yesterday.
He said this partnership among the four energy exploration giants will be replicated in other areas as well to explore more opportunities. "We are planning to expand this strategic partnership to other regions as well, in the coming years," he said.
MOL will become a ten per cent shareholder in Pearl Petroleum while Crescent Petroleum and Dana Gas will each acquire three per cent stake in MOL.