Gas will be supplied from the Chemchemal field to major industrial customers. (Image source: Adobe Stock)

Dana Gas PJSC and Crescent Petroleum, together with their partners in the Pearl Petroleum Consortium, have signed agreements to supply natural gas from the Chemchemal field in the Kurdistan Region of Iraq (KRI) to major industrial consumers

Under the long-term gas sales agreements, cement and steel customers will collectively purchase up to 142mn standard cubic feet per day (MMscf/d) of gas for a period of 10 years, beginning in the second half of 2027 when production from the Chemchemal field, currently under development, is scheduled to commence. New pipelines are to be built by private-sector companies to supply gas to industrial users in Erbil and Bazian, including a dedicated 40-km pipeline linking the Chemchemal field directly to industrial consumers in the Bazian area.

Pearl Petroleum consortium consists of Crescent Petroleum and Dana Gas, along with European energy companies OMC. MOL and RWE. The consortium produces and develops natural gas in the KRI and is one of the largest private investors in KRI’s oil and gas sector.

The partners have committed US$160mn to drill three wells at the Chemchemal field, install an extended well test (EWT) facility, and construct associated infrastructure to support a subsequent full-field development phase to expand gas supply to additional users.

In early October 2025, Dana Gas and Crescent Petroleum completed the Khor Mor 250 (KM250) gas expansion project in the KRI, which added 250 MMscf/d of new gas processing capacity, alongside additional daily LPG and condensate output of 460 MTPD and 7,000 bbl, increasing total gas processing capacity to 750 MMscf/d, a 50% rise. The Khor Mor gas plant provides the fuel for more than 80% of the KRI’s electricity generation.

Majid Jafar, CEO of Crescent Petroleum and board managing director of Dana Gas, said,

“These agreements mark a significant milestone in the development of the KRI’s energy infrastructure, delivering considerable supplies of clean burning natural gas to empower growth in the region’s industry and help displace the use of dirtier, more expensive heavy fuel oils. The milestone underscores the exciting new chapter for the Pearl Petroleum consortium, combining the recent completion of the KM-250 expansion project in October 2025, the appraisal and development of the Chemchemal Field, and other development plans that will considerably enhance the energy sector and economy of the Kurdistan Region and the rest of Iraq.”

Richard Hall, chief executive officer, Dana Gas, added, “This agreement supports the growing energy needs of the Kurdistan Region of Iraq and strengthens the role of natural gas as a fuel source for its industrial base.”

“Beyond energy supply, this agreement supports industrial growth, local employment and long-term economic activity in the communities surrounding the Bazian corridor.”

Production at the Nasr field is set to rise to 115,000 bpd by 2027. (Image source: Adobe Stock)

ADNOC has awarded a US$942mn EPCI contract to McDermott International for the Nasr-115 expansion project, located around 130 km northwest of Abu Dhabi

The Nasr-115 Expansion Project is a critical component of the overall Nasr Phase II Full Field Development project, expected to increase oil production capacity to 115,000 barrels per day (bpd) by 2027. The contract will help advance ADNOC’s strategy to reach oil production capacity of 5mn bpd by 2027.

The scope of work covers comprehensive engineering, procurement, construction and installation for two topside structures, one new manifold tower, one jacket, one bridge and all associated pipelines, cables and brownfield modifications.

More of 55% of the contract value (more than US$500mn) will return to the UAE economy through ADNOC’s In-Country Value Program.

“McDermott shares ADNOC's commitment to increase offshore production capacity and will do its part with safe, efficient delivery of the Nasr-115 Expansion Project to the highest quality standards," said Mike Sutherland, McDermott's senior vice president, Offshore Middle East. "Our decades-long track record of delivering innovative, comprehensive solutions across complex offshore developments supports ADNOC's vision for sustainable energy growth and to meet its capacity goals as part of the P5 project.”

“This award underscores McDermott's position as a trusted partner in executing large-scale energy infrastructure projects in the region. We are proud to further support development of the UAE's energy sector in a safe and sustainable manner,” added Angela De Vincentis, McDermott's vice president of Operations, Offshore Middle East.

Nasr is one of ADNOC’s most advanced digital fields. It uses a suite of technology solutions to maximise production and minimise emissions, including AIQ’s Robowell, a pioneering artificial intelligence (AI) autonomous well-control solution. According to ADNOC, the work will include a new high-speed subsea cable connection which will support the scale-up of AI-enabled operations at Nasr, as ADNOC seeks to become the world's most AI-enabled energy company.

The LNG market faces a potential oversupply. (Image source: Adobe Stock)

The gas and LNG markets face potential oversupply thanks to record FID and demand uncertainty, according to energy consultancy Wood Mackenzie, which identifies five key global gas and LNG themes for 2026:

LNG FID momentum to moderate despite continued project progress

2025 was a record year for final investment decisions, with nine projects totaling 72 mmtpa moving ahead. Three smaller floating LNG projects, two in Argentina and one in Mozambique, advanced, with CP2

Phase 2, Delfin FLNG 1 and Cheniere's Sabine Pass Stage 5 "probable" FID for 2026, supported by strong contracting and cost advantages.

However, with 225 mmtpa of LNG supply currently under construction, the expectation is for lower LNG prices and rising EPC costs. Several projects face delays from inflated construction costs, supply chain constraints and evolving financing conditions. Competition for customers between pre-FID projects and post-FID players is likely to increase. FIDs for well positioned projects, including LNG Canda and

Qatar’s North Field West, may slip into 2027. The outlook for FIDs is expected to moderate in 2026.

Prediction: 4-5 projects take FID in 2026

Asian LNG demand expected to rebound after sharp 2025 contraction

Asian LNG demand contracted by more than 12 Mt year-on-year (4.5%), with China declining by 11 Mt due to a mild winter, high LNG prices and US trade tariffs.

Supply growth of nearly 30 Mt is likely to drive spot prices below oil price parity, encouraging more spot procurement from emerging markets.

China will be the market to watch. Gas demand should grow by 5% on infrastructure projects and real estate recovery. With stable domestic production and flat pipeline imports, LNG will fill the gap, increasing by around 6 Mt but still below 2024 import levels. New gas-fired power stations and regasification capacity will contribute to increased demand across Taiwan, Bangladesh and Vietnam. Weather remains a wild card.

Firmer Asian demand will prove increasingly critical to absorb the wave of new LNG supply.

Prediction: Asian LNG demand to increase by 14 Mt (+5%) in 2026

Russia-Ukraine peace deal could reshape European gas and global LNG balances

The prospect of a US-brokered peace deal in Ukraine fuelled sharp gas price swings in 2025. Should a peace agreement be announced, the most likely market impact would be the lifting of sanctions on Arctic LNG-2 and Portovaya, which could add up to 10 mmtpa to a global LNG market already poised to increase by close to 30 Mt in 2026.

The EU agreed to phase out Russian LNG by 2027 and pipeline gas by 2028. Russian supply under short-term contracts is expected to end from April 2026 for LNG and June 2026 for pipeline flows. The immediate 2026 market impact would be limited, though the EU's resolve may be tested if the ban becomes a peace settlement bargaining point.

Prediction: The EU moves ahead with ban on Russian imports

Henry Hub to trade above US$4/mmbtu as US gas market tightens structurally

Colder than average temperatures briefly drove Henry Hub futures as high as $5.50/mmbtu in December 2025. The US gas market is becoming structurally tighter. LNG exports have increased 17% compared to the same period last year.

LNG export capacity expansion will require incremental feedgas of 2.7 bcfd, with data centres and other sectors adding 3.4 bcfd total in 2026, equivalent to 3%.

As usual, weather dynamics will be key for where prices settle in the winter. Beyond that, the pace and magnitude of price correction will depend on how quickly suppliers respond to tightening fundamentals.

Higher Henry Hub prices longer term will be necessary to promote growth.

Prediction: Henry Hub will average US$4/mmbtu in 2026

EU Methane Regulation and CSDDD face industry criticism over compliance challenges

The EU Methane Regulation (MER) and the Corporate Sustainability Due Diligence Directive (CSDDD) have faced strong criticism from the gas and LNG industries in 2025, especially from major global exporters.

Companies support MER objectives but say compliance difficulties are delaying new contracts and risk disrupting imports as Europe ends Russian reliance.

The CSDDD has already been scaled back by EU officials. Yet critics point out that the EU is imposing obligations on companies outside its jurisdiction, a major sticking point. The US and Qatar warned that the rules could threaten their ability to supply LNG to the bloc.

Prediction: The EU is likely to proceed with both regulations, but further watering down and additional practical compliance measures should be expected

"The gas and LNG industry is navigating a complex transition as abundant new supply meets questions about demand growth and regulatory risks," said Massimo Di Odoardo, vice president, Gas and LNG Research. "The structural tightening of the US gas market, combined with Europe's push to end Russian imports while implementing stricter methane rules, creates both opportunity and risk. How Asia responds to lower prices will be critical to absorbing the supply wave ahead."

Protests in Iran are threatening to disrupt the country’s upstream sector and highlighting a deeper economic crisis, according to Rystad Energy analysis

Iran has restored output and exports despite sanctions, but at a rising cost: deeper discounts to China, expensive ‘shadow’ logistics and shrinking fiscal buffers, including the running down of its National Development Fund (NDF).

Iranian crude production is expected to remain stable at around 3.2mn bpd this year, according to Rystad, with limited short-term disruption to upstream operations, despite significant financing and redevelopment hurdles. The greater risk currently is the geopolitical risk premium as tensions rise and uncertainty persists. With the US administration of President Donald Trump exerting maximum economic pressure on Iran’s trading partners and threatening military intervention, the Middle Eastern oil giant will likely entrench itself even further.

“Iran’s familiar tactics, such as closing the Strait of Hormuz, banking on its trade with China and threatening nuclear escalation, are still on the table, yet must be weighed by their own potential for backfiring on the regime. Economically, Iran has been cornered by heavy sanctions, yet the country has managed to protect what limited revenue remains. Although the US has announced that it will impose a 25% tariff on countries that trade with Iran, China’s crude buying patterns are expected to remain stable. China has an established practice of sourcing discounted barrels from sanctioned producers, and Iran has a proven ability to sustain exports through sanctions evading trade networks. For the status quo to be truly disrupted, external intervention would have to take place,” said Aditya Saraswat, MENA research director at Rystad Energy.

Amid the backdrop of international pressure, Iran’s economy has faced enormous constraints, with inflation standing at 40% as the government’s total budget only nominally increased from US$98bn to US$111bn in the past year. National Iranian Oil Company (NIOC) is officially entitled to 14.5% of total oil and gas exports, which stood at 1.85mn bpd in the current budget. However one-third of oil exports were handed over to the Islamic Revolutionary Guard Corps (IRGC), and expected oil exports have now dropped to 1mn bpd, while the benchmark oil price has been lowered to US$57 per barrel from US$63 per barrel, reducing NIOC’s total receivables.

In addition, many of Iran’s core producing assets are in late life and experiencing steep natural declines. Underinvestment in maintenance, workovers and pressure support will accelerate the decline rates of these legacy fields. Many gas fields have complex structures and low recovery rates that pose challenges for local contractors. With assets under pressure, Iran’s NDF, which was designed to preserve a share of oil and gas revenues for future generations, continues to be treated as a source of near-term financing.

“From the regime’s point of view, the only redeeming factor in this situation is China’s role as the key driver of export revenues. As it stands, China accounts for 90% of Iran’s oil exports, with even a portion of cargoes booked for ‘unknown’ destinations ending up in China. Although the current export model looks feasible in the near term, its sustainability is becoming more conditional,” Saraswat said.

The recovery of Iran’s exports has been driven mainly by discounting, with additional costs incurred by measures required to evade sanctions, such as operating a shadow fleet. Without access to conventional banking channels, Iran relies on yuan-denominated accounts, barter arrangements or circuitous money-laundering pathways that extract substantial commissions. These structural inefficiencies mean Iran receives only two-thirds of benchmark oil, threatening Iran's ability to make a profit, even amid low upstream breakevens of US$20 to US$25 per barrel.

“Iran’s survival under sanctions reflects a mix of sustained upstream investment, strong trade relationships and covert workarounds. The continued brownfield redevelopment of mature fields has helped keep output stable, while contracts awarded to local players have added incremental volumes. However, a heavier reliance on China has drawbacks for Iran. Its margins will weaken as shadow logistics and intermediaries are priced in, and demand could be volatile as quotas and refinery runs change,” Saraswat concluded.