The rout in oil prices may delay Dana Gas’s plan to recoup about US$160 million in overdue payments from Egypt, the Sharjah-based company’s chief executive said.
The company now expects to recover the dues by 2018.
“The mechanism will go ahead,” said Patrick Allman-Ward. “The question is the rate at which we will receive back the overdue receivables. Clearly our calculations were based at US$85 [a barrel], which we thought at the time [was] a fairly conservative assumption.”
In September, Dana Gas signed an agreement with the Egyptian government that allows the Abu Dhabi-listed firm to lift production and gradually recover its outstanding receivables from the incremental production of light oil or condensate, which is found in gasfields operated by the company.
The deal envisages increasing production from current levels of more than 40,000 barrels of oil equivalent per day (boepd) from the company’s operations in the Nile Delta. Peak production is expected to occur in 2017 with incremental daily production of about 160 million standard cubic feet (mmscf) of gas and 5,600 barrels per day of condensate.
The Egyptian government pays Dana Gas a fixed rate of US$2.65 per million British Thermal units (mmbtu) of gas, while condensate is sold on international markets. Dana Gas this month received $60 million in overdue payments from Egypt, which has struggled to reimburse oil firms as the country grapples with financial and security problems emanating from the 2011 revolution that has turned the North African country from a net energy exporter to a net energy importer.
Brent prices have dropped by about 60 per cent to around $46 a barrel since last year’s peak of $115 a barrel reached in June owing to oil oversupply spurred by the US shale oil boom, weaker demand in Europe and Asia and a strong dollar.
When asked for his views on the recovery in oil prices, Mr Allman-Ward said: “I personally believe the oil price will come back in nine to 18 months’ time frame.”
Dana Gas shares closed flat at Dh0.49 yesterday in Abu Dhabi.
dsaadi@thenational.ae
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