x Abu Dhabi, UAETuesday 25 July 2017

Dana Gas again finds success at Egyptian test well

Sharjah-based Dana Gas has stuck gas at a test well in Egypt.

Sharjah-based Dana Gas has struck gas at a test well in Egypt.

The company plans to submit a development plan to move to production at the Begonia-1 discovery well. Gas from the well is expected to add 1,600 barrels of oil equivalent per day (boepd) to Dana's current production of about 34,000 boepd.

The discovery is one of several in recent months. Its proximity to existing operations will allow for a connection to existing pipeline infrastructure, the company said.

"The Begonia-1 well continues a series of rich gas discoveries made last year, with the potential for fast hook-up and production," said Patrick Allman-Ward, the general manager for Dana Gas in Egypt.

The company remains in discussions with the government over outstanding receivables, with Egypt falling behind in its payments to energy companies. Egpyt is one of Dana's two main production sites together with the Kurdish region of Iraq, where the company's finances have also been blighted by insufficient remuneration for its gas.

The company is the sixth-largest producer in Egypt. Investment into the country exceeds US$1.8 billion, Dana said.

Egypt is struggling to meet domestic demand with its own production. Heavy subsidies on gas are a strain on government finances and have interrupted payments to international energy companies.

As the government is struggling to pay companies for gas sold into the domestic market, they are hesitant to commit to acreage in Egypt unless exports can be guaranteed.

In Iraq, Dana has fallen victim to a standoff between the central government and the Kurdish Regional Government, which has resulted in intermittent and incomplete payments by Baghdad and repeated export stops by the Kurds.

The company earlier this year successfully refinanced a $1bn sukuk after failing to repay the principal upon maturity last November.

 

fneuhof@thenational.ae