Dana Gas Egypt signed a gas production enhancement agreement (GPEA) with the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Company (EGPC). The company revealed that the GPEA agreement stated that Dana Gas will launch a programme over a seven-year period, to start in the next few months.
As part of the plan, Dana Gas will be working on drilling 37 new wells and carrying out maintenance of existing wells. Around 270bn cubic feet of natural gas, 8 to 9m barrels of condensate, and around 450,000 tons of LPG (liquefied petroleum gas) are expected to be produced during the seven-year period.
“Peak production is expected to occur in 2017, with incremental daily production of approximately 160 MMscf gas and 5,600 barrels of condensate,” the company said in an official statement on 30 September.
Funds for the GPEA project come from internally generated funds of Dana Gas Egypt’s operations and project financing.
Dana Gas said: “In addition to enhancing the value of Dana Gas Egypt’s assets into which all of the company’s GPEA revenues will be dedicated, the GPEA generated revenues will eventually allow reduction of the company’s Egyptian outstanding receivables of $280m to nominal levels by 2018, from the proceeds of direct sales of all of the incremental condensate at international market prices.”
CEO of Dana Gas Patrick Allman-Ward showed his extreme satisfaction with the newly formed GPEA agreement with the Egyptian government, saying that it “is a significant milestone for Dana Gas in Egypt”.
Allman-Ward also stated that this arrangement will allow them to “recover the overdue receivables due to them, unlock the substantial value of Dana Gas’ current Egyptian assets” and deliver optimum value to their shareholders in the long term.
He added that the 100 millionth barrel of oil equivalent has just been produced in Egypt since it started operations in 2007, which reflects the company’s high progress in developing Egypt’s energy resources.
The petroleum company recently won bids for two new Nile Delta concessions. The company stated that its wholly owned subsidiary has won gas exploration deals to both North Elsalhiya area, known as Block 1 & El Matariya, Block 3.
“Block 1 represents an extension of Dana Gas’ existing successful conventional gas business,” allowing the company to control 100% of the area which in total adds up to 1,527 km². Furthermore British Petroleum (BP) will be partnering with Dana gas to “participate in the block 3 concession area on a 50% basis”.