Dana Gas to Use $60M Repaid by Egypt for Local Investments, Operations
Dana Gas, the Middle East's leading regional private sector natural gas Company, announced Sunday a number of major milestones in the successful fulfillment of its growth strategy in Egypt.
Most recently, the signing of Blocks 1 and 3 Concession Agreements in the Nile Delta provides Dana Gas with additional highly material growth opportunities in the country. This supplements a number of positive developments including the recent signing of the landmark Gas Production Enhancement Agreement (GPEA) and the large payment made by the Egyptian government in December towards outstanding receivables. Together, these milestones place the Company on a much stronger footing in Egypt from which it can benefit for its next phase of growth.
The GPEA allows the Company to significantly enhance production and to start gradually recovering its outstanding receivables in a phased manner over the next few years. This is in addition to the payments made to the industry by the Egyptian authorities from time to time.
Following the signing of this GPEA agreement, a $60 million (AED 220 million) payment was made to Dana Gas by the Egyptian Government in December 2014 as part of its payments to the industry. This payment accounts for 28 percent of the total overdue receivables of $212 million (AED 778 million), and will be used to fund future investment requirements and address operational expenses in Egypt.
The newly awarded Block 1 (DG 100 percent and Operator) is expected to extend the Company’s highly successful shallow gas production business onshore the Nile Delta. In Block 3, the Company will participate on a 50 percent basis with BP as partner and Operator. This exploration venture is targeting the deep Oligocene potential of the area, which, in case of success, would result in material production growth for Egypt and be transformational for the Company.
Patrick Allman-Ward, CEO of Dana Gas, said: “ I am pleased to announce that Dana Gas Egypt has delivered a number of important achievements in recent months which are potentially game-changing for our business. We are poised to deliver strong growth in Egypt in the short term as a result of the signing of the Gas Production Enhancement Agreement duly supported by the payment made by the Egyptian government last month. We have also secured medium-term growth potential through our successful bids for these two new exploration blocks in the Nile Delta. We see this positive momentum continuing and are excited about our exploration and development plans in Egypt.”
Dana Gas is currently the 6th largest oil and gas operator in Egypt. In 2014, the Company was able to increase average production of gas, LPG, condensate and crude oil to around 40,000 barrels of oil equivalent per day, which was an 8 percent increase over 2013 average production. It has surpassed the milestone of producing over 100 million barrels of oil equivalent accumulatively since commencing its operations in Egypt in 2007.
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