Dana Gas is in discussions to secure a $250 million loan from the Development Finance Corporation to expand its gas production activities in the Kurdistan Region of Iraq, its chief executive said on Thursday.
The DFC is the US federal government's financing arm that provides support to private development in lower and middle income countries.
The Sharjah-based gas company has been going through "various steps that need to be done" when it comes to securing the financing, which has "bipartisan support", Patrick Allman-Ward said on a conference call on Thursday.
"They want, of course, to increase the amount of gas production in Iraq, and thereby reduce reliance of Iraq on Iranian gas imports so there's a lot of support for it," he said.
Dana Gas will use the proceeds to develop its Khor Mor field, where it is targeting higher production of gas and condensate, a lucrative liquid associated with production of the fuel.
The company plans to raise total production from Khor Mor and Chemchemal fields to 880 million cubic feet per day, with 36,000 barrels per day of condensate this year. The production increase would require two gas processing trains with a capacity of 250 million cf/d each.
Baghdad has been urged by Washington to curb its reliance on Iranian gas imports, which it procures to plug a domestic shortage of fuel for electricity.
Iraq's challenges with the development of domestic resources and gas flaring has necessitated the need to secure waivers from the US government in order to carry on trading with sanctions-hit Tehran.
On Thursday, Dana Gas reported a net loss of $376 million in 2020 compared with a net profit of $157m in the previous year, due to lower oil prices and the economic impact of the Covid-19 pandemic.
Revenue fell 24 per cent to $349m in 2020 from the year-earlier period due to lower realised prices and less production in Egypt, the company said in a statement to the Abu Dhabi Securities Exchange, where its shares trade.
"Despite the challenges imposed by the global pandemic, we exited the year in a robust financial position with a strong balance sheet, having agreed upon the sale of our Egypt onshore assets, redeeming our outstanding sukuk and entering into a new credit facility at a lower interest rate," Mr Allman-Ward said.
The company plans to advance the development of its assets in Iraq's Kurdistan Region, which account for 90 per cent of Dana Gas' estimated reserves of 1 billion barrels of oil equivalent (boepd).
Overall production declined 5 per cent last year, dropping to 63,200 boepd. However, production increases in the KRI, which rose by 2 per cent helped offset drops in Egypt due to the natural decline of fields.
Mr Allman-Ward said that he was neither "overly pessimistic, nor overly optimistic" about oil prices this year.
International benchmark Brent and its US counterpart have surged nearly 12 per cent over the last month, with the former forecast to reach $70 per barrel from its $60 levels by mid-year.
"Oil prices will remain at the current level for the remainder of the year" he said, while cautioning that a huge amount of spare capacity from producers such as Saudi Arabia could be ramped up in the future.
Dana Gas does not expect to make any revisions to its capital expenditure this year.