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Monday, January 5, 2015
Dana Gas received a payment from the Egyptian government in the amount of $60 million toward its overdue balance for production. The company said that the $60 million represents 28% of the total overdue receivables of $212 million.
The payment was made in dollars and Egyptian pounds; Dana received $10 million in US currency and the balance in the form 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.
Dana is not the only firm to receive a payment on the government’s arrears, according to a statement from Egypt’s Petroleum Minister Sherif Ismail, Egypt recently paid out $2.1 billion of the estimated $5.2 billion it owes. Dana’s payment was just one of many, UK major BG received a hefty payment from the government also, as well as other companies.
Earlier in 2014, Dana Gas and the Egyptian government signed the landmark Gas Production Enhancement Agreement (GPEA) which allows the company to significantly enhance production and gradually recover its outstanding receivables in a phased manner over a three-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 boepd from Dana’s development leases in the Nile Delta. Under the GPEA, Dana 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 Bcf of natural gas, 8 to 9 million barrels of condensate and around 450,000 tons of LPG. Peak production is expected to occur in 2017 with incremental daily production of approximately 160 Mmscf gas and 5,600 barrels 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 boepd 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.”
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