Enerflex ends EH Cryo project amid ongoing conflict in Kurdistan

In Kurdistan, Enerflex Ltd. recently announced the formal termination of its EH Cryo project after suspending activities during the second quarter of 2024. This suspension followed a tragic drone attack that occurred at a nearby facility, which forced Enerflex to demobilize its personnel and notify its customer of a Force Majeure event. As a result of these challenging circumstances, the company's obligations under the project contract became unfeasible, prompting the decision to formally terminate the contract. The EH Cryo project had been a significant venture for Enerflex, representing a net asset position of $161 million at the close of the third quarter of 2024, which included approximately $75 million in backlog work that will now be reversed during the upcoming quarter. A letter of credit amounting to $31 million had also been established to support obligations under the project contract, although Enerflex deems any potential drawing on this security as improper given the current situation. The geopolitical climate, characterized by increasing tensions and instability in the region, has contributed to the decision to terminate the project contract. Furthermore, the news underscores the unpredictable and often dangerous nature of operating in high-risk geographies where political unrest can severely impact business continuity and project viability. Enerflex continues to adapt by focusing on sustainability and energy transition solutions, emphasizing their commitment to the future of natural gas while navigating the intricacies of global market dynamics and local restrictions.