Egypt is paying Dana Gas for all fuel it is receiving from its operations in the country and the UAE-based company is optimistic outstanding payments will be settled, a Dana Gas board member said.
Economic turmoil has stretched Egypt’s finances and it fell behind in its payments to several fuel suppliers.
Dana Gas was still owed AED 729 million ($ 198.5 million) for unpaid fuel bills by Egypt as at June 30, 2012, but Cairo has been keeping up payments for current supplies.
“They are basically paying their current receivables, it’s the backlog that needs to be closed out. But we are optimistic that this is a short term issue,” said Majid Jafar, a Dana Gas board member and chief executive of Crescent Petroleum, Dana’s biggest shareholder.
“It’s an ongoing discussion with regular interaction. We feel that they are doing all they can — they are even going the extra mile and we had some payments even from oil cargoes that they sold,” he said.
“They have been very transparent and proactive in trying to address the receivables issue. The financial situation of the government is well known — the challenges that they are facing fiscally — but we are committed to Egypt long term.”
Rather than being put off by payment problems that followed the overthrow of Hosni Mubarak after three decades in power, Dana is looking to grow in a country that has large reserves and booming internal demand for them.
“We have enjoyed a very good relationship and I would say an even stronger relationship as a UAE company since the revolution with the new government,” Jafar said.
“We are interested in the new bidding rounds potential that the Egyptian government has announced and we think it’s a very promising market.”
Egypt, a gas exporter, has agreed to import Algerian gas and is in talks with Qatar for more supplies to meet surging demand in the country, the prime minister said on Wednesday. Egypt is auctioning oil and gas exploration blocks to boost its own production.
Dana Gas said this week it had discovered more natural gas in Egypt’s Nile Delta, estimating the deposit at up to 6 billion cubic feet, its second gas discovery in Egypt this year.
Dana already has substantial operations in Egypt and said last week that an Egyptian affiliate had started commercial output at a natural gas liquids plant.
Dana Gas has a $920 million Islamic bond maturing late this month. It has said it is looking at options to handle the debt but has not announced specific plans to repay or restructure it.
“Though as a Board Member I am not directly involved, I understand the discussions have been amicable and friendly and are still ongoing,” Jafar said.
Crescent Petroleum, as the leading founder shareholder, owns 21 percent of Dana Gas, which is a publicly-traded company listed at the Abu Dhabi Stock Market.
From Arab News