Sharjah-based Crescent Petroleum has opened arbitration proceedings against Germany’s RWE over a gas pipeline deal in the semi-autonomous Kurdistan region of Iraq.

Crescent is pressing for an estimated $53bn in lost revenues due to RWE’s failure to build a gas pipeline network in the region, according to a source close to the case.

Crescent is the largest shareholder in its sister company, Dana Gas, with which it shares headquarters in Sharjah. The firms are the main stakeholders in Pearl Petroleum, which operates the Khor Mor and Chemchemaal gas fields in the north of Iraq.

According to Crescent, RWE agreed with the Kurdistan Regional Government (KRG) to build a pipeline network to market gas produced from the fields to supply the planned Nabucco pipeline to Europe. However, the deal was not approved by Pearl Petroleum’s owners. It is unclear how Crescent arrived at the $53bn figure.

RWE signed an agreement with the KRG in August 2010 to help develop its domestic and export gas transport infrastructure.

“Transporting this gas – up to 20 billion cubic meters a year [bcm/y] – through the Nabucco pipeline is a priority for us and will also serve to cement our already good relations with Europe and Turkey,” KRG Natural Resources Minister Ashti Hawrami said at the time.

The 3,000-kilometre Nabucco pipeline was planned for operation in 2014, carrying as much as 31 bcm/y from the Caspian region to Europe. The consortium behind the pipeline includes RWE, Austria’s OMV, Romania’s Transgaz, Bulgaria’s Bulgargaz, Hungary’s MOL and Turkey’s Botas. However, RWE sold its stake in the pipeline to OMV in April.

The arbitration is the latest involving Dana Gas, after it began unrelated proceedings against the KRG in late October over delayed payments. It is also still awaiting a ruling on its case against National Iranian Oil Company (NIOC) over the failure of the Salman field development.