Dana Gas, the Sharjah-based producer, has received US$53 million from Egypt in overdue fuel payments and hopes to be fully repaid within a year.
Discussions with the country’s prime minister and energy minister have included the prospect of repaying the remaining $277m in unpaid invoices, plus the roughly $15m in fuel the company continues to provide each month, within a year, said Rashid Saif Al Jarwan, the executive director of Dana Gas. It has now received a total of $130m in payments from Egyptian authorities this year.
Dana Gas, which produces gas, LPG, condensate and crude oil in Egypt, was part of a group of foreign producers to benefit this week from $1.5 billion in payments from the government, whose debt for energy bills totals $6.3bn. Other producers include the United Kingdom’s BP, Italy’s Eni and Apache in the United States.
“This is partially good news,” said Mr Al Jarwan. “It’s business as usual in Egypt and Kurdistan as well and we’re doing the same amounts of efforts in collecting what is due to us contractually, there is no question about our efforts in trying to manage our cash flow as in how much is due to us.”
Earlier this year Dana Gas successfully refinanced a $1bn sukuk after it had been forced to renegotiate the debt with creditors amid delays in payments from its operations in Egypt and the Kurdistan region of northern Iraq.
Shares of Dana Gas on the Abu Dhabi bourse rose more than 4 per cent to 75 fils each yesterday.
The Egyptian government paid $42m in US dollars and the rest in local currency. Although Dana Gas’s contract is denominated in dollars, it has agreed to accept Egyptian pounds to pay local employees and contractors, and will continue to accept it for in-country operating expenses, said Mr Al Jarwan.
“The Egyptian government is very keen and sincere in meeting their obligations, because the fuel that we supply goes to local power generation,” he said. “If there is any shortage in this fuel supply that we provide, then they have to use an alternative at a higher cost, so they know by paying us they avoid a higher bill. They understand it and there is no disagreement on their obligation.”
The situation in Egypt contrasts with Dana’s continuing difficulties in Iraqi Kurdistan. In October the gas company launched international arbitration to clarify the amount it is owed there – $430m according to its count at the time.
State-owned companies in the UAE, such as Mubadala Petroleum and Abu Dhabi National Energy (Taqa), have been exploring opportunities to invest in Egypt’s energy sector as part of a government-led initiative to boost the ailing economy.
Mr Al Jarwan said Dana, which was part of a UAE delegation that visited Cairo this month, was eager to dig exploration wells and increase production. In the third quarter it boosted pumping levels by 29 per cent to 39,350 barrels of oil equivalent per day, compared to 41,500 barrels during the same period last year. But the company cannot invest without receiving payments, he said.
“An additional increase in production is possible, but if there are no payments, if our outstanding amount is not collected, that will have definitely an impact on the production increase or possible decrease.”
On Sunday, Egypt’s oil minister Sherif Simail said the cabinet had approved seven new oil and gas exploration agreements designed to bring investment of at least $1.2bn to the sector with firms including BP, Dana Gas Emirati, Petroceltic International, and Sea Dragon Energy.
The agreements will now be sent for ratification to Egypt’s interim president Adly Mansour, the oil ministry said.
ayee@thenational.ae
