Dana Gas makes first Egypt gas condensate sale, but arrears still mount

The Sharjah-based gas producer said it was paid US$7.2 million for a cargo of 150,000 barrels of condensate produced at its El Wastani gasfields in the El Manzala concession in the Nile Delta

Above, one of Dana Gas' facilities in Egypt. Wam

Dana Gas said on Wednesday that it has made its first international sale of Egyptian gas condensate, although it added that arrears are still mounting as the Egyptian government paid only half of what it owed the company in the first quarter of the year.

The Sharjah-based gas producer, whose largest shareholder is Crescent Petroleum, said it was paid US$7.2 million for a cargo of 150,000 barrels of condensate produced at its El Wastani gasfields in the El Manzala concession in the Nile Delta. The company said that it expects to sell three additional cargoes over the next 12 months if current production rates are maintained.

Dana Gas said it will keep all the proceeds of the sales, so that the share that would normally go to the government will help to make a dent in the large arrears that have built up.

It said that Egyptian collections in the first quarter amounted to $13m, which was only slightly over half the amount owed, thus pushing up the total arrears it is owed by the Egyptian government to $289m, from $265m at the end of last year.

Patrick Allman-Ward, the chief executive, welcomed the first condensate sale but added: “Collections of our overdue receivables in general remain well below our expectations”.

Dana Gas was one of the companies that reached a deal with the Egyptian government in late 2014 to invest and develop the country’s gas sector in return for regular payments. It had planned to raise production by 50 per cent by investing $270m to drill dozens of new wells, but that investment stalled when Egypt’s financial woes meant it could not keep its pledge on payments.

“We are yet to receive a significant payment this year,” Mr Allman-Ward added. ”We continue to engage with various government entities and we hope that the Egyptian government will resolve the situation favourably in the near future.”

In February, Dana Gas said last year’s profit was down 77 per cent at $33m because of stalled Egyptian payments.

Dana Gas said collections in the first quarter from the Kurdish Regional Government of Iraq were better, with $31m representing more than 100 per cent of the amount billed. But arrears there are still $713m, it said.

The company is scheduled to report first quarter financial results on May 11.

Follow The National's Business section on Twitter