The company, based in the United Arab Emirates, was awarded a service contract for the Kor Mor gas field in April 2007, as well as an agreement to study, along with its partner Crescent Petroleum, overall development of the Kurdistan Regional Government's gas prospects.

"We have been honored to work on this project to provide a complete solution of state-of-the-art gas field development, processing and transportation that is urgently required on a fast-track basis for electrical power generation for Iraqi citizens," said Hamid Jafar, Dana Gas executive chairman and Crescent Petroleum's chairman of the board.

The price tag for the project has increased to $650 million and is held up by ongoing construction of the northern Iraq power plants.

Dana Gas said it will be able to supply 150 million cubic feet per day by-mid 2008 and double that by early next year. It said the project is 70 percent complete and the gas will be fed in pipelines to power plants in Erbil and Sulaymaniyah provinces in the KRG.

As part of the April agreement, Dana and Crescent were to work with the KRG to fully assess the region's gas prospects to supply demand both in and outside Iraq. Turkish, U.S. and Iraqi officials met in Istanbul over the weekend to discuss northern Iraq gas, which could potentially supply Europe.

The agreement also mentions "Kurdistan Gas City," an industrial compound serving gas-related industries.

"We are also excited by the Gas City project, to provide added value and economic benefit from natural gas resources, including productive job creation," Jafar said. "We are committed to the immediate progress and development of Iraq's oil and gas sector, as we belong to the region and are here for the long term."

Jafar's company and the KRG have been some of the loudest proponents of increasing the private sector in Iraq from its current nationalized oil and gas industry. While that plan has its opponents, a larger roadblock is the fight between the KRG and Baghdad over the Kurds' unilateral moves in the oil sector.

Disappointed by the pace of a proposed new oil law, the KRG signed a number of oil and gas deals last year, and in August approved its own regional oil law. Baghdad calls the moves illegal and has threatened to blacklist any company that signed with the KRG.