Dana Gas is negotiating with the Egyptian government to sell extra gas to recoup US$210 million in overdue bills.
Such a scheme would be a major boost for the Sharjah-based gas producer, which is waiting on $720m in total from Egypt and the government in the Kurdistan region of Iraq.
Dana can easily bump up production by 25 per cent in Egypt, said Patrick Allman-Ward, the chief executive of the company since this month.
“We have potential production that we could bring on quickly and at a low cost,” he said. “We have argued with the government that we can bring new production on stream if we get paid.”
Dana’s briefing with reporters at its headquarters yesterday was a rare occurrence for the company, which a year ago was beleaguered by questions about its unpaid $1 billion sukuk, the first potential Islamic bond default in UAE history.
With a new chief executive, the successful rollover of the debt and small but steady payments from the Egyptian government, the company hopes to turn a new leaf.
Because of political and economic upheaval, Egypt has struggled to make payments. This year it has paid off $65m of $120m owed. Dana is accepting up to 65 per cent of the payments in Egyptian pounds, which it uses to pay contractors, service suppliers and other operational costs in the country.
The payment backlog could jeopardise production capacity in the long term, warned Mr Allman-Ward.
“As soon as you stop investing, production starts declining,” he said. “It’s a feature of the petroleum industry and it’s a particular feature of the gas industry. If we stop investing in our assets, then our production will start declining again.”
The company is still on the hunt for a chief financial officer. Shares of Dana on the Abu Dhabi bourse remained unchanged yesterday at 68 fils.
“The Egyptian economy is going through a rough period right now but it will become good,” said Mr Allman-Ward. “These are huge growth markets for all sorts of areas.”