Sharjah-based Dana Gas will drill the first offshore well in the Nile Delta in April as part of its $5 billion (Dh18.4bn) planned investment in Egypt as it bets on potential yields of up to 20 trillion cubic feet of gas, according to its chief executive.
"The [Block 6/North Arish] well has been delayed from February spud [drilling], which we had originally intended to in an April-May spud date," Patrick Allman-Ward told The National on the sidelines of an energy conference in Cairo.
Dana Gas, which had struggled to receive payments from Egypt in the past is pushing ahead with investments in the most populous Arab state, which in recent years has made discovery of large reserves of gas off the Eastern Mediterranean. The North Africa's biggest economy has since launched licensing rounds to court international oil and gas companies to invest in hydrocarbons resources in the Mediterranean, Nile Delta and also potentially its Red Sea.
"We are planning to drill a deepwater well in our Block 6 this year, which in the case of success, is a four to six trillion cubic feet scale resource and we think that if the play is proven, the total block has around 20 tcf,” he told delegates attending the conference.
The Abu Dhabi-listed company said there was a 50 per cent chance of success on the concession, and he expects the results to come by “June-July timeframe”.
In the event of success, the total resource base required is around $5bn in investment in phases to produce such high volumes, said Mr Allman-Ward.
"That’s not going to be all in one go. It’s going to be spread out and we’ll be doing a sequential development and we’ll aim to reach a level to sustain that and that’s the order of magnitude of the level of investment that would be required to bring this resource of gas to the market -- if it’s there,” he said.
Dana Gas received $44 million in payment from Egypt in December, of which $35m was from the government, with the remainder accrued from sale of condensate. The payment capped a successful year of recovery of payments from the North African state for Dana Gas. Total receipts by the end of 2018 stood at $199m, compared with $164m recovered in 2017.
Dana Gas has yet to receive any further payment but the company remains confident that the Egyptian government would reduce outstanding payments to zero this year, Mr Allman-Ward told The National.
"They have stated the intention to clear all of the outstanding receivables in 2019, so of course we’re hopeful that’ll be the case,” he noted.
The energy company is producing 35,000 barrels of oil equivalent per day in Egypt, including 165 million standard cubic feet per day of gas, 5,500 bpd of condensate as well as 300 tonnes per day of liquefied petroleum gas, he added.
Dana Gas also planned to more than double its gas output in Iraq and looked to sell the additional volumes in Turkey, Mr Allman-Ward told Bloomberg in an interview.
Output by Pearl Consortium, which Dana Gas operates with its parent Crescent Petroleum, plans to raise production by 500 million cubic feet per day over the next three years from current 400 million cf/d.
The new volumes will be transported either through a Rosneft-operated pipeline or via Dana Gas' own link from the Iraqi Kurdish capital Erbil to Turkey.
