Dr. Bahrooz Jaafar  

Executive Summary

The Kurdistan Region of Iraq possesses around 10 gas fields, some of which produce associated gas, with total reserves estimated at approximately 30 trillion cubic meters. Currently, the only field in production is Khor Mor, which falls under the administrative jurisdiction of the Chamchamal district; an area that itself holds significant gas reserves. This presents a major opportunity for KRG leadership to initiate the development of a natural gas industry. By utilizing a portion of the available gas for the production of complex fertilizers and other chemical products, the region could generate between 85,000 and 100,000 jobs and attract investments exceeding $120 billion. This article outlines how natural gas industrialization can enhance energy security, improve the quality of life, and drive economic growth in the Kurdistan Region.

1. Dana Gas’s Efforts Must Be Complemented

Dana Gas, Crescent Petroleum, and Pearl Petroleum are energy companies ultimately owned by a single family based in the United Arab Emirates. The Khor Mor gas and oil field, which falls under the administrative jurisdiction of Chamchamal district, was first discovered in 1928, with exploration of Chamchamal wells following in 1929. After the fall of the Ba'ath regime in Iraq, the area was liberated and became part of the Kurdistan Regional Government (KRG). The residents of this area, who are entirely Kurdish, have long been subjected to violence, extermination campaigns, and genocide by successive Iraqi governments until the fall of Saddam Hussein in 2003.

Dana Gas was founded in the UAE in 2005. Following negotiations and logistical arrangements, the company signed a contract in 2007 with the KRG's Ministry of Natural Resources to produce natural gas, LPG, and condensate from Khor Mor.

As of 2025, the field is producing 525 million cubic feet of gas per day, supplying four power plants and contributing approximately 2,800 MW of electricity, around 75% of total power generation in the Kurdistan Region. Additionally, natural gas is currently being extracted from three wells in Chamchamal.

At face value, this seems like a success story. However, several critical concerns remain:

First, industrial sectors require a reliable and consistent energy supply to maintain productivity. Any disruption—whether caused by natural disasters, geopolitical instability, or market shocks—can severely impact output. Fields like Khor Mor and Chamchamal, which supply about 80% of Kurdistan’s liquefied natural gas and produce 15,000 barrels of condensate per day, are essential to the region’s energy infrastructure. Khor Mor is projected to reach 1 billion cubic feet per day by 2027. Yet, despite its strategic importance, the benefits of this field have not translated into tangible development—not even for the villages surrounding the field or the Chamchamal district itself.

Second, while Crescent Petroleum was founded in 1971, Dana Gas was created in 2005 as part of the consortium. Pearl Petroleum followed in 2009 as a joint venture between Dana Gas and Crescent Petroleum. Dana Gas signed a major contract with the KRG in 2006 for the development of the Khor Mor field. Despite this partnership, in 2013—when the Kurdistan Region was experiencing one of its strongest financial periods—Dana Gas filed a lawsuit in London against the KRG, claiming breaches of contract and non-payment. The motives behind this move remain a matter of speculation. In July 2015, the International Court of Arbitration ruled that the KRG must compensate the company with $1.96 billion—a major financial setback for the region. Given the volatile dynamics of the energy sector and ongoing regional tensions, similar legal and financial disputes could easily recur.

Third, while the Kurdistan Region has signed contracts with Dana Gas, the company has shown little regard for the broader political and economic challenges facing the KRG in its relationship with the central government in Baghdad. Dana Gas continues to pursue operations in other Iraqi provinces such as Diyala, Baghdad, and Basra, often aligning itself more closely with the federal authorities than with the KRG.

Fourth, Dana Gas and its partners have made tens and sometimes hundreds of millions of dollars in net profits each quarter from the Khor Mor field. Yet their corporate social responsibility (CSR) efforts in the region have been negligible. Over the past three years, the Khor Mor field has been targeted six times by drones and Katyusha rockets launched by militias. Despite the obvious threat, the consortium has failed to install advanced air defense systems to protect the site and surrounding communities.

Fifth, if the Kurdistan Region's revenues were managed transparently, institutionally, and with a national vision, the entire population would benefit, beginning with those in positions of power. Unfortunately, previous management practices have failed even to serve the political leadership effectively. To address both internal and regional security risks and to foster sustainable development, the region must seriously consider industrialization, even if this realization has come somewhat late.

2. Korea Project Management (KPM) Could Spark an Industrial and Financial Revolution in the Region

South Korea has made significant industrial, economic, and cultural contributions to Iraq and the Kurdistan Region. According to a proposal available to me, one of South Korea’s major companies, Korea Project Management (KPM), which specializes in infrastructure, industry, food security, and energy security across several countries, has expressed interest in purchasing natural gas from the Chamchamal and Khor Mor fields to implement the following initiatives:

First, KPM plans to use this gas to produce integrated fertilizers, which function similarly to chemical fertilizers and aim to bolster food and agricultural security. This initiative has the potential to revive not only Kurdistan’s depleted agricultural lands but also benefit Iraq and neighboring countries through the export of chemical products and agricultural products. In addition, the company will manufacture dozens of high-demand chemical compounds such as ammonia, phosphate, and urea; products that are both stable and valuable in the global market. Moreover, the project includes research and development (R&D) programs to create innovations applicable to other sectors, such as hydrogen production from natural gas.

Second, KPM backed by JP Morgan and its local partner, Gross Company, plans to invest more than $122.22 billion into industrial development in the Chamchamal district.

Third, the proposal outlines the creation of five industrial zones, which are expected to generate around 105,000 medium- and high-wage jobs.

Fourth, the timing is critical. If the Kurdistan Region does not seize this opportunity and finalize the contract with the support of Crescent Petroleum and its subsidiaries, Iraq could step in and take over the project, or changing regional dynamics could cause the opportunity to vanish.

Fifth, the KPM proposal includes an allocation of $6 billion for charitable initiatives. This is a transformative opportunity not only for Chamchamal and its surrounding areas but for the entire Kurdistan Region. Chamchamal—known as the capital of martyrs and Anfal victims, and the largest district in the Kurdistan Region—has suffered from severe water shortages for over two decades. What other company is prepared to invest millions of dollars to address even the most basic problems of this district?

Sixth, initiating industrialization will align Kurdistan with industrialized nations, which typically hold a significant share in global energy markets. These countries engage in energy diplomacy and participate in international agreements to ensure access to sustainable development. With KPM's involvement, this project will not only improve energy security and resource diversification but also elevate energy to a matter of national security. Today, energy diversification is not just a policy goal—it is a matter of survival for every country.

Seventh, the project will help diversify the region’s energy mix and enhance resilience to global price shocks, strengthening the overall energy infrastructure.

3. Joint Cooperation Strengthens Human and Natural Potential

Just as Dana Gas currently sells its products to local companies such as Qaiwan with the backing of the Sulaimani administration, it should also enable similar transactions with reputable foreign companies like KPM. Importantly, under the terms of the contracts signed by the KRG with companies operating in the Khor Mor field, the KRG retains full rights of intervention in such agreements.

Notably, in September 2024, Dana Gas partnered with the UK-based climate technology company Levidian to implement LOOP technology, which converts methane into clean hydrogen and high-quality graphene. These types of partnerships should be expanded and diversified to unlock even greater economic and environmental value for the Kurdistan Region.

Industry: The Great Pillar of Nationalization

Abramo Fimo Kenneth Organski (A.F.K. Organski), a prominent professor of political science at the University of Michigan, is renowned for formulating Power Transition Theory. In his influential book World Politics, Organski outlines three key drivers of power in international relations: industrialization, population, and effective governance. While he underscores the importance of industrialization, he also emphasizes that it is political capacity and a well-developed human population, acting as vital resources, that enable a country to rise within the global hierarchy of power.

Organski classifies countries into three categories based on their dominance and influence within the world system: Great Powers, Middle Powers, and Weak States/Colonies. For a country to transition from a weak position to a middle or great power status, industrialization is one of the most decisive factors. Consider the cases of India, which endured nearly 190 years of British colonial rule, and China, which suffered through its so-called “Century of Humiliation” (1839–1949), marked by military defeats, unequal treaties, and partial foreign occupation. How did these nations rise from such vulnerable positions to become global powers? The answer lies, in large part, in industrial development.

Every company or consortium operating in the Kurdistan Region must recognize that their work should contribute not only to profits, but also to strengthening the region’s economic and strategic foundations. Kurdistan has dozens of untapped sectors open to investment—but industry must come first. Industrialization is not just an economic necessity; it is a fundamental pillar of nationalism. A region or country that lacks an industrial base will inevitably depend on others and remain unable to compete on an equal footing in the international arena.

There is a strong historical connection between political power and economic strength. One of the foundational thinkers of the realist school of international relations, Friedrich List, addressed this in his 1841 work The National System of Political Economy. Writing in 19th-century Germany, List asked how a nation can enhance both its wealth and power. Although he supported a cosmopolitan economic vision—where all of humanity shares in common values, he also saw the necessity of economic nationalism. He warned against over-reliance on free trade and instead advocated for protective policies that support domestic industries.

List criticized liberal economic policies and promoted the idea that even small workshops and primary industries, if locally owned and developed, could become engines of national strength. His theory suggested that countries like Germany could resist industrial dependence on Britain by fostering homegrown manufacturing capabilities. By strengthening these small sectors, a nation could become self-reliant and competitive on the global stage.

Conclusion

The Kurdistan Region must urgently consider a new framework for energy security—one that re-evaluates the role of previously operating companies and actively supports industrial growth through strategic proposals such as the one presented by Korea Project Management (KPM). This approach offers a secure and forward-looking path to elevate the region’s economy and move it decisively from one phase of development to another.

Just as Friedrich List envisioned a century before, and as Japan later demonstrated after World War II, governments that support manufacturing and industrial development can transform national economies. In contrast, the Kurdistan Region remains stateless, without a strong industrial base, heavily reliant on imports, and burdened by investment costs not offset by value-added production. Its oil and gas resources remain largely outside the framework of a national economic system.

Rather than industrializing, Kurdistan has witnessed the emergence of a wealthy elite, enriched not through structured national development but through informal or opportunistic involvement in the production sector. This has only deepened economic inequality and class divisions, weakening the foundations for long-term growth and resilience.

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Bahrooz Jaafar holds a Ph. D. in International Relations from Cyprus International University, Nicosia. He is originally from the Kurdistan Region of Iraq and serves as the founder and head of the Mediterranean Institute for Regional Studies. His recently published book, Deciphering the Eastern Mediterranean's Hydrocarbon Dynamics: Unraveling Regional Shifts (Emerald Group Publishing), has garnered significant attention from global academic and policy institutions.