dana gas to risk losing zora field on startup failure
Last Updated : GMT 00:17:02
Arab Today, arab today
Arab Today, arab today

Dana Gas to risk losing Zora field on startup failure

Arab Today, arab today

Arab Today, arab today Dana Gas to risk losing Zora field on startup failure

Abu Dhabi - Arabstoday

Dana Gas, a fuel producer with US$1bn in Islamic bonds maturing in October, risks losing rights to the Zora natural-gas field in the UAE because the company failed to start production, two people familiar with the situation said. The government of the UAE sheikhdom of Sharjah, where Dana Gas is based, may end the company’s contract unless it shows progress at the field this year, the people said, declining to be identified because discussions are under way. Dana Gas has received warnings from the Sharjah Petroleum Council, the body responsible for energy projects in the emirate, and is trying to keep control of Zora, the people said. Officials at Dana Gas and the petroleum council declined to comment on the matter when called today by Bloomberg. Dana Gas signed a 25-year agreement in 2008 to explore Sharjah’s Western Offshore concession, an area of over 1,000 sq km. The contract included development of the offshore Zora field, where the company committed to complete drilling work, install offshore platforms for immediate processing and production, and build a pipeline to bring gas to shore, according to a statement published at the time. Losing rights to the field may deal a further blow to Dana Gas as it struggles to obtain payments for operations in Egypt and Iraq and on concern it won’t have enough money to repay the 7.5 percent Islamic bonds due in October. The company’s shares have tumbled 41 percent in the past year, while the yield on its notes soared 70.3 percentage points in 2012 to a record 107.8 percent at 11:18 a.m. in Dubai. The company is also in the midst of replacing senior management. Ahmed al-Arbeed, the CEO, plans to retire from his post in September as his three-year term ends, the company said April 26. James Dewar left his role as CFO at the end of 2010, and the company hasn’t named a replacement. Overdue payments owed to Dana Gas have hampered its ability to invest and expand. Trade receivables for operations at the end of the first quarter stood at AED1.04bn (US$280m) in Iraq and AED825m in Egypt. The company’s oil and gas production fell 4.5 percent to 5.73m barrels of oil equivalent in the period, while exploration expenses plunged 81 percent to AED7m. Dana Gas was planning to start producing from Zora in early 2012, at a rate of 60m standard cubic feet a day, according to its website. Worley Parsons, which is providing project management services at the field, has completed tender invitations for companies that want to build the processing plant, pipelines and offshore platform, according to the Dana Gas earnings report published May 15.

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