Despite the speculations of most analysts expecting the slow down and deterioration of the energy sector in Egypt, Dana Gas has broken these theories through a shower of successful gas discoveries. This is just the beginning and yet more to come, said Dr. Hany El-Sharkawy, Dana Gas Country Director
The series of discoveries hit by Dana Gas raises the question, what are the factors behind this exceptional success?
Actually, the incidence may happen once and sometimes twice but if you have five successes in a row, there must be something behind. I believe that this is a result of a really hard work using a very high techniques and technologies in our business. So, we definitely have hoped for it. We always plan for success, but in our business, you do everything to minimize the risk and increase your chances of success. We actually had a plan to increase and double our reserves in Egypt, specifically in 2008 and we in fact did succeed in fulfilling our target through the drilling of many exploration wells.
Have you been supported by the Ministry of Petroleum?
I have to admit that we have been given a lot of good support from the government and associated agencies. Besides, we cannot deny the fact that the government is seeking more gas production, therefore there was a mutual interest and we were happy to work together to bring all these discoveries on production as soon as possible.
Was the Salma discovery added to the chart of national gas production?
The Salma discovery is a very good one and I have to say that it is one of the best discoveries in the country so far. Due to its size, additional works such as well appraisal must be carried out to make sure that the estimated 200 billion cubic feet are in the whole park and not a far fiction. Usually when you drill one well, you can have a good estimate of the amount of reserves then you must drill more wells in the same pool to assure the number of molecules that are within this total of reserves. So, the current plan is to drill additional appraisal wells in the Salma discovery before we attempt to develop it and before committing the appropriate capital for it.
Have you started the production from AZHAR-1?
The Azhar is probably similar to the Salma, since it needs additional work before we start production through development. And its proven reserves count for nearly 100 bcf+. On the other hand, Al-Basant well came on production last March and right now we still ramping up the production; we have reached approximately 17 million cubic feet of gas per day until now.
How do you position Dana Gas among other gas companies in Egypt?
We are classified, according to the numbers that we know, the sixth gas company in Egypt. However, some of these recent discoveries mentioned before are not yet on the production right now. Hence, when we ramp up our production adding the new discoveries, we might have a better rank.
How many gas fields you are investing in?
Right now, we actually have six gas fields and one oil field in addition to the fields that are not yet developed.
Are you expecting any further new discoveries?
As long as we are drilling exploration wells, I will be expecting new discoveries. I am very optimistic about 2009 as well.
Was it better for Dana Gas to reach these discoveries in a different period of time, especially before the economic crisis and the market recession?
Well, let me tell you something, I had discussions with different people about the crisis and its impact on gas producers in Egypt and they were gloomy. However, I realized that we do not suffer as much as the oil producers because our commodity price will not go down. Of course we are financially affected, but not to the same extent compared to oil producers. And, as the core of crisis lies in the banks, the privilege of funding projects is not as easy as it was two years ago. Hence, the unavailability of funds slow downs the aggressive work and development programs.
Is your production in Egypt exported to the mother company in UAE?
Our current reserves are not justified to be exported and therefore most of our production is dedicated and committed to the domestic market. Nevertheless, in the future, we will be looking at exporting opportunities once we have critical mass and I think we are approaching this very quickly.
What is your opinion about establishing an organization for gas exporting countries? What are the pros and cons for Egypt to join it?
I think it is time to have some kind of regulations and guidelines for gas prices; however, such organization will not be another OPEC for gas because gas, by definition, is different in all ways than oil. In my opinion, the organization should be formed on a regional level. Gas needs regional criteria not global one in order to charge the commodity. I believe that Egypt will benefit from such organization, because the country is on the track of an aggressive export program and should take advantages of its exports and maximize the value of gas by having a set of regulations and price guidelines.
Do you think Egypt still enjoys enough gas reserves?
According to Web Mackenzie, there is a lot of gas yet to be found in the region of Nile Delta, especially in the offshore areas and deepwater. So, I think Egypt has a good future, and when it comes to gas reserves, Egypt has the ability to play a major role in the gas market as a producer.
After the meeting of Dana Gas Board of Directors in the UAE, how much is the expected budget set for Dana Gas Egypt in the next fiscal year?
Let me put it this way, we have to be very cautious this year even if we have the necessary funds, we have to carefully consider the means of spending it. Actually, we have postponed, not cancelled, some priorities or items in order to preserve capital since we do not know when this crisis is coming to an end. We are regularly revising our budget once every three months, to evaluate whether to spend more or cut costs.
What are the updates concerning Gas City?
I think it is a wonderful project, as you know Dana Gas is involved in upstream, midstream and downstream projects, and this is a typical midstream-downstream project which Dana Gas has a lot of experience in it. It is a very useful project to maximize the value of gas. This is the cluster of the industry which comes together and interacts with each other. The name “city” comes from the fact of being a very significant project with accommodations, infrastructure, labor, educational and medical systems. This long-term project is to bring significant job opportunities in Egypt. Currently, we are studying various options to locate the Gas City and we are in discussions with the authorities to see what will be the optimal location to construct the City.
By Mohamed Fouad