Regional gas sector growing strongly despite global financial crisis
Dana Gas PJSC, the Middle East’s first and largest regional private-sector natural gas company, expects a strong year of growth in both production and operations in 2009, building on the Company’s significant achievements of 2008, when it achieved revenues of AED 901 million in the first nine months of the year, and grew production by over 50% with start-up of its major gas project in the Kurdistan Region of Iraq, and further discoveries in Egypt. The Company also stated that it has no exposure to real estate or stock market investments, and is in a solid cash position to fund its project requirements, having successfully raised $1 billion in a convertible sukuk in late 2007 despite a tightening credit market.
Speaking about the Company’s achievements and business outlook, Dana Gas Executive Chairman Hamid Jafar stated that 2008 was an excellent year for Dana Gas, and that the Company will continue to build on its important asset base in 2009, and already has major plans underway for the coming year:
“Looking forward to 2009, Dana Gas will continue to implement our strategies for growth and expansion, focusing on capturing new opportunities through both acquisition and new project development. This year will inshallah see the long-awaited start-up of the UAE Gas Project and fast-track development of the Zora Gas Field in Sharjah, while our production in the Kurdistan Region of Iraq will progressively increase to 300 million standard cubic feet per day, and our recent new discoveries in Egypt will also be brought into production, while we continue with further extensive developmental activities in all our projects.”
One of the firm’s most notable achievements for the year was the delivery of first gas in its major joint project with Crescent Petroleum in the Kurdistan Region of Iraq in a record time of 15 months. With an investment of US$650 million, the project is the largest private-sector investment in Iraq today and the largest private-sector oil and gas project in Iraq for several decades. The delivery of first gas enabled Dana Gas to announce in November that its production was up by over 50 percent.
In its Egypt operations, Dana Gas made a number of important gas discoveries as part of its extensive drilling campaign for 2008, most recently the important rich gas discovery last week in its El Basant-2 well, in addition to its oil discovery at El Baraka-2 and gas discoveries at El Basant-1 (El Tawil), with current discoveries already exceeding the Company’s target for new reserves in 2008.More discoveries in Egypt are expected soon, potentially doubling the Company’s 2008 reserve base. These results significantly enhance the economics of Dana Gas’s Egyptian assets, and will add materially to the Company’s overall gas and petroleum liquids production. In total, Dana Gas plans to increase total Company production rate by 76% in 2009, to 68 thousand barrels of oil equivalent per day by the end of 2009.
In addition, the Company will be starting the construction of the LPG recovery plant in Ras Shuqair, and will be conducting feasibility studies for other similar projects in Egypt. Dana Gas also has major plans for its Gas Cities concept, and is looking to expand business development of this important regional endeavour.
Closer to home, Dana Gas signed important agreements and completed significant projects in the UAE, including its joint venture with Emaratto own, manage and operate the Middle East’s first common user gas pipeline, the Hamriyah Gas Pipeline Project, which was completed and inaugurated in June 2008.
In March 2008, Dana Gas signed a 25-year concession for the Western Offshore Area of Sharjah, and to develop the Zora Gas Field within the block. The concession agreement covers a total area of over 1,000 square kilometres including the Zora Gas Field, which has established gas reserves and a ready high value market. The Company has begun implementation of this important project, which includes upstream development as well as transportation of the produced gas and petroleum liquids via a 25km offshore pipeline, which will add significant production and revenues to Dana Gas’s expanding diversified portfolio.
Executive Chairman Hamid Jafar explained that, financially speaking, Dana Gas’s focus for 2009 will be on optimising the Company’s capital structure and financing arrangements, and taking advantage of the opportunities that will present themselves over the next few months. He emphasized that the Company is in a healthy financial position, and its business has not been significantly impacted by the global financial crisis:
“I would like to reassure our stakeholders that the Company has diligently and professionally stuck to its core business in the utilization of its capital, and has not invested or speculated in the financial or property markets. Our core business is gas, and we are fortunate that the majority of Dana Gas’s current revenues emanate from gas production, processing, transportation and sales which have not been affected by the recent downturn of global oil prices. Therefore, our operations remain profitable despite the recent oil price decline. And despite the global economic downturn, the gas sector in the Middle East remains highly promising, and is continuing to show strong and sustained growth and opportunities for investment as a core sector. Dana Gas is thus in a unique position of both benefiting from and contributing to this healthy growth,” Jafar added.
The past year also saw Dana Gas establishing a robust five-year business plan and entry strategies for new countries, as well as recruiting high calibre industry professionals in the fields of engineering, geosciences, finance, legal and administration for its ongoing and expanding operations. The Company’s total manpower has grown to around 500 people, and still growing.
2008 also saw Dana Gas included in the Standard & Poor’s S&P Pan Arab Shariah Index and the S&P GCC Shariah Indices, Dana Gas was designated as ‘UAE Company of the Year’ in ACQ Magazine’s First Annual Country Awards for Achievement.
(Dana Gas Press Release)