Dana Gas, the Middle East's leading regional private sector natural gas company, announced on Sunday that it has received from the Egyptian Government a payment of US$60 million. This represents 28% of the total overdue receivables of US$212 million. This payment has been received in the form of US$10 million and the balance in equivalent Egyptian pounds. All of this money will be used to pay for the company’s overdue industry receivables, fund future investment requirements and address operational expenses in Egypt.
Earlier in 2014, Dana Gas and the Egyptian Government signed the landmark Gas Production Enhancement Agreement which allows the company to significantly enhance production and gradually recover its outstanding receivables in a phased manner over a 3-year period going forward. The GPEA agreement allows investments to be made in an important development program to eventually increase production from current levels of around 40 000 boe/d from the company’s Development Leases in the Nile Delta. Under the GPEA, Dana Gas will undertake a long term staged work program over a seven year period with project work expected to start in the next few months. The first export sales of incremental volumes of condensate will follow thereafter. Estimated incremental production during the period will be approximately 270 billion ft3 of natural gas, 8 to 9 million bbls of condensate and around 450 000 t of LPG. Peak production is expected to occur in 2017 with incremental daily production of approximately 160 million standard ft3 gas and 5600 bbls of condensate.
During the discussions that Dana Gas has continued to have with the Egyptian authorities to resolve the issue of its outstanding payments, it has already been able to increase production for the benefit of the Egyptian economy and its people. Dana Gas Egypt’s gas, LPG, condensate and crude oil production averaged 40 000 boe/d in 2014, which is an 8% increase over 2013 average production.
Patrick Allman-Ward, CEO of Dana Gas, said: “We would like to thank the Egyptian Government for making this payment. We are also delighted to have concluded the Gas Production Enhancement Agreement and are working closely with the authorities to accelerate the implementation of the GPEA in order to fast-track enhanced production and the payment of the remaining outstanding receivables as quickly as possible going forward. Dana Gas is now preparing for the startup of the project and is in the process of securing materials and drilling rigs".
Dana Gas is among the most active oil and gas companies and is the sixth largest gas producer in Egypt. The company has invested around US$2 billion in Egypt to date, making it the GCC’s largest investor in the oil & gas sector in the country.
Dana Gas was also recently awarded the North El Salhiya (Block 1) and El Matariya (Block 3) onshore Concessions in the Nile Delta as part of the 2014 EGAS bidding round held recently in Egypt. The company will operate the Block 1 Concession Area on a 100% basis. It is expected that exploration success and future production from conventional gas reservoirs in the Block, utilising Dana Gas’s existing infrastructure, has the potential to extend the Company's highly successful gas production business onshore the Nile Delta.
Dana Gas Egypt will participate in the Block 3 Concession Area on a 50% basis with BP as partner and operator.
Adapted from press release