Pearl Petroleum alleges in a confidential arbitration that Enerflex performed defective work on the KM250 gas plant expansion in Iraq’s Kurdistan Region, and seeks costs and damages. Enerflex defends its force majeure declaration and counterclaims for amounts it says it is owed after termination. Enerflex filed its rejoinder on February 27, 2026, and no hearing date or award is public.
Latest development Feb 27, 2026
On February 27, 2026, Enerflex filed its rejoinder in the arbitration, according to its first-quarter 2026 report. No hearing date or award has been made public.
Why it matters
The tribunal will decide who bears the cost when a contractor leaves a gas project under drone attack, testing how far force majeure protects contractors in conflict zones. Enerflex carries $161M of project assets tied to the contract.
Background
Pearl Petroleum Company Limited develops the Khor Mor gas field in the Kurdistan Region of Iraq. Dana Gas and Crescent Petroleum, both based in Sharjah, each hold 35% and act as joint operators, and OMV, MOL, and RWE each hold 10%. In January 2020, Pearl appointed Exterran to engineer, procure, and build KM250, a plant to process 250 million standard cubic feet of gas a day, largely financed by the contractor. Enerflex acquired Exterran in October 2022.
On April 26, 2024, a drone struck a condensate storage tank at Khor Mor, killing four contractor workers. Enerflex declared force majeure on May 3, 2024, suspended work, and demobilized its personnel. On August 19, 2024, Pearl gave notice terminating the contract, citing numerous performance issues. Enerflex called the termination a wrongful attempt to get around its contractual right to suspend work while the site was unsafe. The termination took effect on September 9, 2024, and Pearl began arbitration that day to recover costs and damages for what it calls Enerflex’s defective performance.
On November 27, 2024, Enerflex sent its own notice of termination, citing continuing force majeure, and called Pearl’s claims baseless and unsubstantiated. Pearl seeks what Enerflex describes as material monetary damages, and Enerflex counterclaims for amounts it says it is owed. The proceedings are confidential under the agreed arbitration rules, and neither side has disclosed the amounts claimed.
Pearl finished KM250 itself and began commercial gas sales on October 15, 2025, raising Khor Mor’s processing capacity by 50%. Another drone strike hit a storage tank on November 26, 2025, and production was restored by December 3, 2025. Pearl filed its reply and defense to counterclaim in the fourth quarter of 2025, and Enerflex filed its rejoinder on February 27, 2026. Enerflex carries $161M of project assets and keeps a $31M letter of credit in place. In August 2026, Enerflex said the outcome was unknown and that it might not prevail, and no hearing date or award has been made public.
Timeline 8 events
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FilingEnerflex files its rejoinder in the arbitration
Enerflex answered the reply and defense to counterclaim that Pearl filed in the fourth quarter of 2025.
Enerflex Ltd., Q1 2026 interim financial statements (Form 6-K, May 7, 2026)Enerflex Ltd., Q2 2026 Management's Discussion and Analysis (Form 6-K, August 6, 2026)
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OtherDrone strike on a Khor Mor storage tank halts production
No one was injured. Production was restored to normal levels by December 3, 2025.
Rudaw: drone strike on Khor Mor gas fieldDana Gas PJSC Integrated Report 2025
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OtherPearl Petroleum starts commercial gas sales from KM250
Pearl completed the expansion itself, adding 250 million standard cubic feet a day and raising Khor Mor’s processing capacity by 50%.
Khaleej Times: Crescent Petroleum, Dana Gas boost Khor Mor capacity by 50% with early completion of KM250 ProjectDana Gas PJSC Integrated Report 2025
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OtherEnerflex terminates the contract and calls Pearl’s claims baseless
Enerflex cited continuing force majeure and said it would seek to recover amounts owed. It put its net asset position on the project at $161M.
Enerflex Ltd.: Enerflex provides update related to Kurdistan project (November 27, 2024)
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FilingPearl Petroleum starts arbitration against Enerflex
The termination took effect the same day. Pearl seeks to recover costs and damages for what it calls Enerflex’s defective performance.
Dana Gas: ADX disclosure on Pearl Petroleum's arbitration against Enerflex (September 10, 2024)Dana Gas PJSC Integrated Report 2025Enterprise AM: Pearl Petroleum initiates arbitration against Khor Mor EPC contractor
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OtherPearl Petroleum gives Enerflex notice terminating the KM250 contract
Pearl cited numerous performance issues. Enerflex called the termination a wrongful attempt to get around its contractual right to suspend work while the site was unsafe.
Dana Gas: ADX disclosure on Pearl Petroleum's arbitration against EnerflexIraq Business News: Major Legal Dispute over Khor Mor Gas Project
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OtherEnerflex declares force majeure and suspends work on KM250
Enerflex suspended activity at the site and demobilized its personnel after the fatal attack at an adjacent facility.
Dana Gas PJSC Integrated Report 2025Enerflex Ltd.: Enerflex provides update related to Kurdistan project (November 27, 2024)
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OtherDrone strike at Khor Mor kills four contractor workers
A drone hit a condensate storage tank at the gas facility. Pearl suspended production and restored it to normal levels on May 3, 2024.
Dana Gas PJSC Integrated Report 2025Rudaw: Dana Gas begins arbitration against Enerflex over Khor Mor project delays
Experimental AI forecast
How it is madeHow will the Pearl Petroleum v. Enerflex arbitration over the KM250 contract be resolved by December 31, 2028?
- Pearl and Enerflex settle23%
- Still pending on December 31, 202821%
- Award nets payment to Enerflex19%
- Split award, no clear net winner19%
- Award nets payment to Pearl18%
- Resolves by
- Dec 31, 2028in 26 months
- Record confidence
- Low
Settlement is the single most likely outcome at 23%, with a final award (56% across three outcomes) more likely overall by December 31, 2028. Written pleadings closed with Enerflex’s February 27, 2026, rejoinder, so a hearing and award are plausible within about two years. The merits look evenly balanced on the record.
How it resolves. Resolved from Enerflex’s public filings, press releases, or Pearl shareholder disclosures (Dana Gas, Crescent, OMV, MOL, RWE). “Pearl prevails” if a final award orders a net payment by Enerflex to Pearl. “Enerflex prevails” if a final award orders a net payment by Pearl to Enerflex or dismisses Pearl’s claims while upholding Enerflex’s counterclaims. “Settlement” if the parties publicly report a signed settlement ending the arbitration before a final award. “Split award” if a final award issues but grants each side partial relief with no clear net payment disclosed, or rejects all claims and counterclaims. “Still pending” if none of these has occurred by December 31, 2028.
Reasoning
Starting point. Large international construction arbitrations with claims and counterclaims after contract termination (ICC-type rules): ICC construction cases often take about three to four years from filing to final award. Roughly a third to half of commercial arbitrations settle before an award, though fewer settle once written pleadings close.
Construction arbitrations under institutional rules typically run three to four years, and this one has moved quickly, reaching a rejoinder about 18 months after filing. That points to a hearing in late 2026 or 2027 and an award in 2027 or 2028, so the December 31, 2028, date leaves a reasonable margin. Settlement remains a live path. Enerflex carries $161 million of project assets and a $31 million letter of credit, and Pearl has already completed KM250 itself, which narrows the commercial stakes to money. On the merits, Enerflex’s force majeure suspension after a fatal drone strike is a sympathetic defense. But Pearl cited earlier performance problems, and Enerflex disclosed in August 2026 that it might not prevail. Construction disputes with cross-claims often produce split results, so a split award is as likely as a clean net win for either side. The leading alternative to resolution is delay, since hearing scheduling, document disputes, or tribunal deliberation could push an award past 2028. The record names no tribunal, seat, rules, or amounts, which limits precision.
Pleadings closed February 2026, so hearing and award are next · Enerflex’s $161 million exposure creates pressure to settle · Force majeure after fatal drone strike versus prior performance claims · Cross-claims make split outcomes common in construction awards · Confidential forum, so outcomes surface only through corporate disclosures
Generated automatically by Claude Opus 5.5 on Oct 19, 2026 from this case’s record on this site, and published without editorial review. The probabilities are the model’s judgment, not measured frequencies, and they are scored publicly as cases resolve. Not legal or investment advice. How the forecasts are made