Dana Gas lawsuit against the Kurdistan Gov't has come to a halt

Dana Gas lawsuit against the Kurdistan Regional Government has come to a halt — An Iraqi worker, gas field. Photo: AFP

Rizgar Khoshnaw | Exclusive to iKurd.net

Two days ago, I received a call from an individual in Sulaimani I never met before asking me questions about Dana Gas and what I thought of the case.

He said that he has been reading my articles and decided to search, and found, my contact information to ask me two questions. He asked me the following questions:

1- If I thought the KRG has indeed paid the $2 Billion settlement they lost in London courts on November 27, 2015;

2- Why all of the sudden there are no news about this case and all gone quite?

Of course this case is extremely complicated and not many people are privy to the detailed information concerning this subject, but what I can say, with confidence, that the KRG has not paid Dana Gas the $2 Billion or any portion of it. The 28 days deadline for the KRG to pay has come and gone and no payment is made and, strangely, no one is talking about this issue anymore.

I would be very surprised if the KRG has paid a single dollar of the lawsuit to Dana Gas so far. So, why all of the sudden there are no news at all about this case? Neither the KRG nor Dana Gas are talking about this subject and has remained quite. I searched the web site of Dana Gas and they have absolutely no news at all regarding this lawsuit and no updates since they won this case three months ago.

I said I am confident that Dana Gas has not collected this huge award since their stock remains very stagnant, cheap and unfazed by this huge win. This clearly indicates that the investors, as well as the company itself, do not believe they will see any of the $2 Billion they won against the KRG!!

If Dana Gas has collected any money from this settlement, then we would surely see huge rise in the stock price as well as large volume of trades and neither has happened. The market capitalization of the stock is 3.48 Billion AED (~$947 Million) and if Dana Gas was to collect such huge amount, the $2 Billion, then we will surly see a drastic upsurge of the underlining stock.

Under any normal conditions and circumstances, any publicly traded company that wins a case with a value of over 200% of its market capitalization, the stock should easily double or triple, but this did not happen to Dana Gas. Especially that Dana Gas stock is actually a “penny stock” which usually means very volatile and risky- stock is currently trading at .50 AED, which translate in to $0.14 only!

Traditionally, a “penny” stock would appreciate by hundreds of percent on any good news, and positive development, but in the case of Dana Gas, the stock did not rise at all and remains very cheap and speculative.

Interestingly, I can use an example of another foreign oil company that is currently operating in Kurdistan which has experienced a huge rise in their stock when they received good news.

The company I am referring to is Gulf Keystone. When GK received a very small payment from the KRG ($20 million on February 1st, 2016) their stock shot up 43% in a single day! And when Dana Gas wins a staggering $2 Billion lawsuit, their stock does not appreciate at all.

We can easily draw a conclusion that the KRG has neither the intentions nor the capability of paying this exuberant amount and this fact is known to the investors as well as the company itself.

Now, lets get back to the issue of all sides are now very quite and saying nothing about the non-payments and the lawsuit. A very likely/possible scenario a deal was agreed upon between the KRG and Dana Gas and is is been held secret from the public.

The scenario that I am suggesting is for the KRG to have agreed and given serious concessions/compromise, and future payments, to Dana Gas in return to staying quite and not pursuing the $2 Billion payment at this time.

And if the KRG has agreed to give Dana Gas more of the oil they extract from Kurdistan, this will undoubtedly end up benefiting Dana Gas much more than the Kurds. Of course the future Kurdish generations will pay a very hefty price for KRG’s mistakes, corrupt and primitive dealings.

Dana Gas, a very young company, does not have a proven track record of any success operations since its establishment on December 2005.

Shortly after their inception, they landed a contract with the KRG on April 2007 and it is easy to see that the KRG had not done it due diligence prior to awarding them an oil contract. With all of the mistakes that the KRG has made so far, I am truly amazed that the government is still functioning.

If indeed I am correct in my assessments and conclusion, this could spell disaster for Kurdistan. Of course since the KRG oil ministry operates in such secrecy, no one will know in the short-term, but I am certain in the future, we will hear what truly happened between Dana Gas and the KRG.

In time, the truth always comes out! Since the KRG has miserably failed in the oil sector, I think the time has come for the KRG to turn all oil contracts they have signed with foreign companies to Baghdad and then no matter who bring up lawsuits against the KRG, they have to deal with Baghdad instead.

Turning over oil contracts to Baghdad is the easiest/best way for the KRG to get out if this huge mess that it got itself into before Kurdistan is sold to Turkey and the unqualified and corrupt foreign oil companies!

Rizgar Xoshnaw, a senior Kurdish writer based in Washington, a longtime contributing writer and columnist for iKurd.net.

The opinions are those of the writer and do not necessarily represent the views of iKurd.net or its editors.