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Dana Gas: “Strong Operational and Financial Performance”

Dana Gas PJSC has announced its financial results for the half year ended 30 June 2022.

In the first six months of the year, the Company generated a net profit of AED 407 million ($111mm) or 5.8 fils per share, an 82% increase compared to an adjusted net profit (excluding reversal of impairment) of AED 225 million ($61mm) in H 1 2021.

The gains in Dana Gas’s profitability in the first half were driven by elevated hydrocarbon prices, the Company’s continued commitment to maintaining a low-cost base and strong operational performance in the Kurdistan Region of Iraq (KRI).

The Company’s revenue for the first six months of the year increased 31% to AED 1,041 million ($284mm) as compared to AED 792 million ($216mm) in H1 2021 and its operating costs dropped 16%. The Company’s realized prices during the first half of the year averaged $87/bbl for condensate and $44/boe for LPG compared to $48/bbl and $32/boe respectively in H1 2021.

Despite the challenging security situation, the Company’s current operations in the KRI have continued uninterrupted. Production from the KRI increased 1% in the first half and the KM250 expansion project has progressed well. During the first half, drilling of the project’s first development well was completed, and drilling operations for the second well are currently in progress. Whilst EPC construction work on KM 250 was suspended in June amid heightened security concerns, the Company is working with the authorities to address security concerns and to resume construction.

Given the strong operational and financial performance the Board expects to maintain its semi-annual dividend payment in keeping with the Company’s dividend policy.   The interim dividend will be decided by the Board at its meeting in September.

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, commented:

“Dana Gas delivered strong half year results, supported by our robust operational performance, low cost base and favourable energy market conditions. Despite an increased uncertainty around the global economy amid high inflation, the outlook for the remainder of 2022 is still encouraging with both energy prices and demand remaining high.”

Operations & Production

The Group’s overall production in H1 2022 was  61,100 boepd, a 5% reduction from 64,000 boepd in H1 2021. This was due to a 9% production drop in Egypt mainly as a result of natural field decline. Production output in the KRI increased by 1%, with production averaging 34,500 boepd in H1 2022 versus 34,300 in H1 2021.

Operations have continued as normal during the period. Heightened uncertainty in the region and subsequent precautionary security measures have impacted the Khor Mor expansion project. As a result, the KM250 project remains on temporary suspension. The Company and its partners are working closely with the KRG to address all concerns and all parties remain committed to implementing the expansion project and resume construction activities as soon as possible.

Liquidity and Collections

The Company’s cash position at the end of H1 2022 stands AED 759 million ($207mm) including AED 436 million ($119mm) held at the Pearl level.

The Group collected a total of AED 660 million ($180 mm) during the H1 2022, with the KRI and Egypt contributing AED 495 million ($135mm) and AED 165 million ($45mm) respectively.

(Source: Dana Gas)

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Dana Gas achieves 50% Gas Production Growth in 3 yrs

Dana Gas and its partner, Crescent Petroleum, have reported record sales gas production from their operations in the Kurdistan Region of Iraq (KRI), reaching 452 million cubic feet of gas per day (MMscf/d) at the end of 2021.

The production milestone is the culmination of numerous process improvements at the Khor Mor gas plant, including a bypass project completed in 2020 as well as a de-bottlenecking programme earlier in 2018. Together, the process improvements have grown the production by 50% from 305 MMscf/d in 2018.

Dana Gas and Crescent Petroleum jointly operate the Khor Mor and Chemchemal gas fields on behalf of the Pearl Petroleum consortium, supplying the gas which enables much needed electricity generation in the KRI, and also producing close to 16,000 barrels of condensate and 1,000 tonnes of LPG per day. The successful process improvements will be reinforced by the KM250 expansion project at the plant which is currently under implementation, and will increase total capacity by an additional 55% to 700 MMscf/d by April 2023.

Major works for the US$630 million KM250 expansion project resumed in April, 2021 after a delay of one year due to the COVID pandemic. The project is now on track for the new target start date of April 2023. As part of the expansion works, the Company is also preparing to drill up to five development wells, which are scheduled to commence production in March 2022.

The KM250 Gas Expansion Project is supported by a $250 million financing agreement for 7 years with the U.S. International Development Finance Corporation (DFC) which was announced in September 2021. After completion of the KM250 project, the partners also plan a further KM500 train that would raise production to almost 1 billion cubic feet per day to meet rising demand for cleaner burning natural gas and electricity generation in the Kurdistan Region and all of Iraq.

Majid Jafar, CEO of Crescent Petroleum and Board Managing Director of Dana Gas, said:

“The achievement of this production milestone underscores the progress we continue to make at Khor Mor to meet the rapidly growing demand for natural gas in the KRI. Despite the challenges the whole world has faced over the past two years, we are proud to have continued delivering uninterrupted supply of clean-burning natural gas to support the KRI economy and enable a healthy recovery. Meanwhile our major expansion plans at the Khor Mor and Chemchemal fields to target 1 billion cubic feet per day in the coming few years will enable improved services across the region for years to come.”

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, said:

“This milestone is testament to our people and their hard work making consistent production growth possible at our Khor Mor gas plant. Our continued investments since 2018, notably the Khor Mor de-bottlenecking and bypass projects, have allowed us to deliver reliable supplies of clean energy to support the KRI economy and its people, with enhanced economic and environmental benefits which will increase as we further grow production.”

Total investment by the Pearl Petroleum consortium exceeds US$2.3 billion to date, with total cumulative production of over 360 million barrels of oil equivalent (boe) of natural gas and liquids. The uninterrupted supply of gas to power plants in Erbil, Chemchemal and Bazian provides over 80% of the KRI’s power generation and has resulted in significant fuel cost savings through substitution of diesel representing both environmental and economic benefits for the Kurdistan Region and Iraq as a whole.

The displacement of diesel fuel for power generation in the KRI with gas has also enabled emissions savings of 42 million tonnes of CO2, thereby making a major contribution to reducing greenhouse gas emissions and reducing local air pollution in the region as well as supporting the transition to better energy sources to tackle global climate change.

(Source: Dana Gas)

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IBBC Dubai Autumn Conference fields Top Speakers in All Sectors

As a measure of confidence in the global and Iraqi economy, the Iraq Britain Business Council (IBBC) is seeing a marked upswing in quality and quantity of speakers at the Autumn Conference at the Address hotel, Dubai 22nd November.

The topic, in line with COP26 and the new energy horizon, is one of sustainability. Not only is this a key question for the oil and gas sector in Iraq, but also for the diversification of the economy and sustainable finances and industrial sectors within the country. With the hope of formation of a new government and stronger oil prices and government revenues, this could be described as a critical juncture in the evolution of Iraq.

Will the Government make the bold reform steps its people require? Can the economy diversify and enable the private sector to flourish? How will Iraq reform its energy sector and inflect towards renewable power, and develop its agricultural intentions at a time of water scarcity? How best to train and employ the many young people in the short term and how can the digital transformation of Iraq be delivered.

The Oil Minister H.E Ihsan Abdul Jabbar Ismaael intends to attend, along with Dr Salem Chalabi President of TBI, the Iraqi Ambassador to UAE, the British Ambassador to Iraq, and HM Consul General to Middle East. There is a very strong showing among IBBC members, leading IOC’s including BP, TotalEnergies, and Basra Gas Company, and major suppliers to the Energy Sector such as Hydro-C and Oilserv and the ability to meet their CEO’s at the event.

Professor Frank Gunter will give his insightful analysis of the economic outlook for Iraq and the steps to reform it must take to create a sustainable economy.

Finance too is fielding heavyweight speakers from IFC, Standard Chartered, Sardar Group (Principal Sponsors), Emirates credit insurance and a representative Director General of the Finance Ministry. Of particular interest are companies dedicated to supporting reform in Iraq, notably City and Guilds via GEMs and Stirling Education who are setting up international level qualifications for Iraqi companies for the first time, to raise standards and opportunities for Iraqi companies and youth, and SAP who are dedicated to the digital transformation of Iraq and will be outlining their vision and practical steps to achieve this. Both skills and digital applications are key drivers of a sustainable economy and take centre stage in this respect.

On the Industry Panel we see Dahlia Energy, Sardar Group, Al Busttan and Khudairi discussing the diversification of the economy and how they can help sustain momentum into the future, with their forward-looking businesses.

In parallel the online Tech conference is addressing data and its benefit to Government, business and the citizen. Sponsored by SAP, who will lead on the benefits of data in digital transformation, complimented by UK’s GDS, Mastercard on smart cities, UK’s Agri-epicentre and British Water and Serco; all leaders in their fields and passionate about the benefits of technology and data in delivering sustainable future economies.

For companies looking to meet the main business leaders in Iraq, this really is a conference to attend. Not only to meet Government officials and ministers, but also the leading supply chain organisations and IOC’s and to learn about the future opportunities and likely evolution of Iraq’s economy. To this end there is a pre-conference reception the night before at the Iraqi pavilion Dubai Expo 2020, and many opportunities to interact with delegates during lunch and coffee breaks, as well as the ability to sign up to view the conference online.

For more information and the latest speaker line up- please go to: IBBC Autumn Conference – IBBC (iraqbritainbusiness.org)

About the sponsors:

Saradar Group: Principal sponsors

With more than 30 years of rich experience in the automotive sector, Sardar Group became the leading group in the Automotive Sector in Iraq. Their intimate knowledge of the Iraqi market helped import, stock and sell the right brands, types, and models, while their excellent reputation, track record and credibility have helped grow the business times many over since 2003.

Since 2005 with a desire to move from Automobile Trading to providing its customers with all-round Automotive Solutions, Sardar Group started utilizing the synergies of its existing operations to diversify its automotive business activities to include Trading, Leasing of Vehicles, Equipment & Machinery and most importantly Aftersales Service Support.

Today, Sardar Group represents world-renowned automotive brands and heavy construction equipment & machinery exemplified in the following brands:

  • Toyota & Hino (in partnership with Sumitomo Corporation)
  • Jaguar
  • Land Rover
  • Polaris
  • Doosan
  • TOTO

Hydro-C : Gold Sponsors

Hydro-C is catalysing the transition of fossil fuel-based energy to renewables by means of introducing sustainable green solutions into the industry to decarbonise operations and projects, and maintain profitable output. The company plan to focus on Solar, Wind and Hydro powers as a source of energy to achieve net Zero with energy providers and IOCs by 2050 in Iraq. By trading the UK innovative solutions and replicating successful projects which can cut on emissions and support sustainable growth. The company focus is on investing in the young generation, education, new technologies and innovations to support this transition.

SAP: Gold Sponsors

SAP is one of the world’s leading producers of software for the management of business processes, developing solutions that facilitate effective data processing and information flow across organizations. SAP helps companies and organizations of all sizes and industries run their businesses profitably, adapt continuously, and grow sustainably. With a global network of customers, partners, employees, and thought leaders, SAP helps the world run better and improves people’s lives. SAP is the market leader in enterprise application software, helping companies of all sizes and in all industries run at their best: 77% of the world’s transaction revenue touches an SAP system. SAP’s machine learning, Internet of Things (IoT), and advanced analytics technologies help turn customers’ businesses into intelligent enterprises. Their end-to-end suite of applications and services enables its customers to operate profitably, adapt continuously, and make a different

City&Guilds/ GEMS: Gold Sponsors

City and Guilds was Founded in 1878 and Granted a Royal Charter by Queen Victoria in 1900.

Global leader in skills development. 4 million people each year use City and Guilds to develop skills that help them into a job, develop on that job and prepare for their next job. Global Benchmark operating in Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Turkey and UAE

Vocational Education / City and Guilds Models in Iraq:

  • To Partner with Training Institutions for delivery of City and Guilds qualifications – pathway to work programmes with curricula developed by employers.
  • Accredit employers’ own training so employees can obtain internationally recognised qualifications.
  • Partner with Iraqi investors to set up Private Technical and Vocational Institutions that deliver City and Guild qualifications.

Operational in Baghdad, Basra, Erbil and exploring a project in Najaf.

Serco: Silver Sponsors

Serco is managing Air Traffic control systems in Iraq and internationally. In the Middle East, Serco employs more than 4,500 people across four countries including the United Arab Emirates, the Kingdom of Saudi Arabia, Qatar and Iraq

Basra Gateway Terminal: Bronze Sponsors

Basra Gateway Terminal (BGT) is Iraq’s premier container and multi-purpose cargo handling facility. It is situated in Umm Qasr, 50 km from Basra and 500 km from Baghdad.

Operated by International Container Terminal Services Inc. (ICTSI), BGT’s team of high-performing Iraqi and International port professionals deliver customer-focused, high productivity and congestion-free port services to Iraq’s economy.

Bell Finance LLC: Bronze Sponsors

Bell Finance Limited Liability Company was created in the US State of Delaware in July 2019 to build upon the Iraq Middle Market Development Foundation’s lending and educational activities in Iraq since 2005 (www.immdf.org). Bell will continue IMMDF’s lending activities by co-financing with Iraqi banks qualifying private sector projects that generate employment and economic growth in Iraq, incorporating Iraqi private sector companies as equity partners. Bell will also continue and expand IMMDF’s educational activities in Iraq.

(Source: IBBC)

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Khor Mor gets $250m Financing from DFC

Pearl Petroleum, the consortium led by Dana Gas and Crescent Petroleum of the UAE, has signed a $250 million financing agreement with the U.S. International Development Finance Corporation (DFC) to support the gas expansion works currently under way at the Khor Mor gas plant in the Kurdistan Region of Iraq (KRI).

DFC is the development finance arm of the U.S government and proceeds from the 7-year DFC financing will support an increase in gas production capacity by 50% to 690 million standard cubic feet (scf)/day to meet rising demand for clean natural gas for electricity generation and industry in the KRI. The total project cost is $630 million and the remaining financing has already been secured through a regional bank facility and the EPC contractor.

The KM-250 project is the first stage of a two-train expansion project at Khor Mor that aims to boost total production capacity to approach 1 billion scf/day. Work resumed in April 2021 after onsite construction was halted last year due to the COVID pandemic and is currently on track for completion by April 2023.

Total investment by Pearl Petroleum at Khor Mor to date exceeds US$2.1 billion with total cumulative production of over 341 million barrels of oil equivalent (boe) in natural gas and liquids. The uninterrupted supply of gas to power plants in Erbil, Chemchemal and Bazian has resulted in significant fuel cost savings and economic benefits for the Kurdistan Region and Iraq as a whole.

The gas produced to date has enabled emissions savings of 42 million tonnes of CO2 by displacing diesel fuel in power generation in the KRI, thereby making a major contribution to reducing greenhouse gas emissions and local air pollution in the region as well as supporting the transition to better energy sources to tackle global climate change.

Between 2018 and 2021, the Khor Mor Gas Plant also benefitted from a 45% production increase through an optimization of the facility bringing current total production to 106,000 barrels of oil equivalent per day (boepd). The project is today the largest regional private sector upstream gas operation in Iraq.

Mr. Majid Jafar (pictured), CEO of Crescent Petroleum and Board Managing Director of Dana Gas, commented:

“This financing agreement with DFC underscores the importance of developing the natural gas resources in the KRI to support regional economic development and growth. Despite the global challenges presented by the COVID pandemic, we have continued to maintain our record of uninterrupted operations and even managed to grow production. The DFC agreement is a testament to our successful track record and further highlights the potential of these resources and the bright future for the KRI.”

Dr. Patrick Allman-Ward, CEO of Dana Gas, added:

“With our partners in Pearl Petroleum we are proud to be further developing the gas sector of the Kurdistan Region of Iraq, delivering expanded supply of cleaner energy, and supporting local economic development. This agreement underscores our continued confidence in the region and its long-term prospects.”

Mr. Dev Jagadesan, Acting CEO of DFC, said:

“DFC’s investment in the Khor Mor expansion will substantially increase access to energy for people all across the Kurdistan Region of Iraq. This highly developmental project represents the United States’ continuing investment in the KRI.”

In April 2007, Dana Gas and Crescent Petroleum entered into an agreement with the KRG for exclusive rights to appraise, develop, produce, market, and sell petroleum from the Khor Mor and Chemchemal fields in the KRI. Production from a newly built plant at Khor Mor began just 15 months later, in October 2008, an industry record. In 2009, Pearl Petroleum was formed as a consortium with Dana Gas and Crescent Petroleum as the majority shareholders, and with OMV, MOL, and RWE joining the consortium subsequently with a 10% share each.

Full-time staff at the operation number over 500, with over 85% local staff, including many in senior management positions. The companies have implemented a corporate social responsibility program to support local communities with equipment and supplies to deal with the COVID pandemic such as ventilators, sanitizers and protection equipment, in addition to a pledge to donate 100,000 vaccines to be administered in those local communities. This is in addition to ongoing support with local education, health and power supply as well as humanitarian aid for persons displaced from conflict zones as well as orphans. These initiatives assist the local communities in improving their standard of living, health, well-being, security and stability and the development of human capital.

(Source: Dana Gas)

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UK’s Proserv Wins Contract at Majnoon Oilfield

By John Lee.

UK-based global controls technology company Proserv Controls has secured a significant contract to manufacture and deliver 22 wellhead control panels (WHCP) to the Basra Oil Company (BOC) for use on the Majnoon Oil Field in southern Iraq.

The deal has been arranged through KBR, the Houston based engineering, procurement and construction management (EPCM) company, which is the EPCM lead on BOC’s plans to significantly ramp up production capabilities at the field.

The 22 WHCPs each has the capability of controlling up to four wells and they have been earmarked for use on 70 new wells which are currently in the development phase. At present, Majnoon has a capacity of just over 200,000 barrels per day (bpd) of production, but BOC’s strategy is to more than double this to above 400,000 bpd in the next two years.

Proserv will deliver the WHCPs in three lots, with the first due towards the end of Q3 2021, with the second scheduled for Q4 and the final tranche set to arrive in March 2022.

The firm will make use of its well-developed footprint in the Arabian Gulf to deliver this order, with the WHCPs being manufactured at Proserv’s dedicated site in Jebel Ali, Dubai.

The value of the contract has not been disclosed.

(Source: Proserv Controls)

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Dana Gas Expansion Plans “Well Underway” in Kurdistan

By John Lee.

Dana Gas PJSC announced that its H1 2021 collections from the Kurdistan Region of Iraq (KRI), and Egypt have increased 106% year-on-year to $185 million (AED 678m), the highest level in more than five years.

Dana Gas, which owns a 35% stake in Pearl Petroleum, saw its share of collections from sales of condensate, LPG and gas in the KRI jump 85% to $87 million in the first half 2021 as compared to $47 million in the same period the previous year.

The Company received cash dividends of $48.3 million from Pearl Petroleum over this period. For the same period, the Dana Gas share of Pearl Revenue was $87 million, EBITDA $74 million, Net Income $57.4 million, Cash Balances $61 million and Gross Debt $93 million.

The Company share of total KM 250 expansion CAPEX is $220 million, which will be funded at the Pearl level. Dana Gas share of Pearl Petroleum production for the first half 2021 averaged 150 MMscf/d of gas, 5,250 bbls/d condensate and 350 MT/d of LPG.

In Egypt, Dana Gas collected $98 million during H1 2021, compared to $43 million received in the same period of 2020, representing a 128% increase.

Dr Patrick Allman-Ward, CEO of Dana Gas, said:

“This is one of our best collection periods in the past several years, driven and supported by the strong rebound in oil prices. The respective governments of both the KRI and Egypt are meeting their payment obligations, ensuring the petroleum industry investors are receiving their current monies on time and catching up on overdue payments.

“This provides us with the confidence to reinvest in our operations, notably in the KRI where our expansion plans are well underway. We are in the process of constructing our new KM250 gas train which is on track for first gas in Q2 2023. In Egypt, we continue to work diligently to maintain production and to prepare for drilling our exciting exploration well in our offshore Block 6 Concession Area which holds material potential of over 20 Tcf of gas resources.“

(Source: Dana Gas)

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Masdar to Develop Solar Projects in Iraq

By John Lee.

Masdar, a subsidiary of the Abu Dhabi-based  Mubadala Investment Company, has signed a strategic agreement to develop 2,000 MW of solar photovoltaic (PV) projects in Iraq.

Heads of Agreement (HOA) were signed at a virtual ceremony by His Excellency Majid A. Hantosh, Minister of Electricity, the Republic of Iraq, Her Excellency Suha Al-Najar, President of the National Investment Commission (NIC) for the Republic of Iraq, and Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar.

The signing took place in the presence of His Excellency Ihsan Abdul Jabbar Ismail, Minister of Oil for the Republic of Iraq, His Excellency Suhail Al Mazroui, Minister of Energy for the UAE, and His Excellency Dr Thani Al Zeyoudi, the Minister of State for Foreign Trade for the UAE.

His Excellency Ihsan Abdul Jabbar Ismail, Minister of Oil for the Republic of Iraq, said:

“The Government intends to increase and enhance the national production of clean energy. Through this agreement with Masdar, we will generate 2 GW of solar power through projects in central and southern Iraq.

“Iraq is targeting 20 to 25 percent of energy coming from renewable sources, rather than fossil fuels, equivalent to 10 to 12 GW. This agreement with Masdar, a global leader in renewable energy, is an important step in the development of the clean energy investment sector and the exploitation of solar energy in Iraq.“

HE Suhail Al Mazroui, Minister of Energy for the UAE, said:

“We are grateful to the Government of Iraq for providing Masdar with the opportunity to contribute to the implementation of the Republic of Iraq’s renewable energy strategy. The UAE is committed to working with the Republic of Iraq to develop sustainable energy resources. This initiative also highlights the importance of public and private sector partnerships in finding affordable solutions.

“Masdar has been a pioneer in developing clean energy projects, and is now active in more than 30 countries around the world, with a total value of more than US$20 billion and a production capacity exceeding 11 gigawatts. Masdar will leverage the expertise it has built up through these projects to support the Republic of Iraq on its clean energy journey.“

HE Dr. Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, underlined the strong brotherly relations that unite the UAE and the Republic of Iraq, supported by many deep political, social and economic ties, and driven by the keenness of the leadership of the two brotherly countries to enhance prospects for cooperation in all fields, especially vital areas of common interest.

He pointed out that the cooperation between Masdar and the government of the Republic of Iraq will add significant value to the Emirati and Iraqi partnerships in addressing the challenges posed by climate change and keeping pace with the growing demand for energy. It will also contribute to supporting Iraqi efforts aimed at implementing quality projects to produce 10 gigawatts of solar energy by 2025.

HE Al Zeyoudi further affirmed the UAE’s keenness to facilitate channels of technology transfer, enrich knowledge and encourage the exchange of the best and most successful experiences to promote economic development in Iraq.

HE Suha Al-Najar, President of the National Investment Commission for the Republic of Iraq, said:

“The project is one of the largest renewable photovoltaic solar projects in the Middle East, and falls within the vision of Iraq’s sustainable transition plan 2021- 2030. The project delivers 2 GW of green energy for Iraq national network. It opens the way for cooperation and knowledge exchange between the two parties in the field of energy planning and sustainable transition. A steering committee of both parties is established for this goal. The business model is Independent Power Producer, and the investment will be according to law13-2006 of the National Investment Commission.

“The project ensures clean and sustainable energy production for different areas in Iraq, and displaces carbon dioxide emissions resulting from fossil fuel generation. The project will also provide new jobs in the energy sector, with the manpower for project construction and operation beyond 2,000.“

Mohamed Jameel Al Ramahi, CEO of Masdar, said:

“This agreement will define the path for the development of clean energy solutions that will drive growth in the Republic of Iraq and help the Government meet its climate goals. The UAE shares Iraq’s commitment to diversify away from a dependence on oil & gas, and to accelerate the transition to clean energy sources. We are proud to support the Government of Iraq on this vital stage in its clean energy journey and we will leverage our expertise to deliver a more sustainable future for the nation.”

(Sources: Masdar, Govt of Iraq)

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Dana Gas to Increase Drilling in Iraqi Kurdistan

Dana Gas PJSC, the Middle East’s largest regional private sector natural gas company, today announced its Preliminary Unaudited Financial Results for the full year ended 31 December 2020.

The Company reported a Net Profit of $36 million (AED 131mm) versus $88 million (AED 322mm) in 2019, excluding one-off non-cash impairments and other income. Including these one-offs, the Company reported a Net Loss of $376 million (AED 1.4bn) versus a Net Profit of $157 million (AED 575mm).

A total of $412 million (AED 1,51bn) of impairments were incurred mostly related to the sale of Dana Gas Egypt onshore assets.

Dana Gas’s continued operations (Kurdistan Region of Iraq) contributed an annual net profit of $32 million reflecting the profitability of the remaining business despite the challenging year caused by the COVID-19 pandemic.

Revenue was $349 million (AED 1.27bn) in 2020 compared to $459 million (AED 1.68bn) in 2019 due to both lower realised prices and lower production in Egypt.

The Company’s robust, long-standing programme to control operating expenses helped to effectively navigate the challenging market environment in 2020. G&A costs were reduced by a further 20% year-on-year.

Dana Gas fully redeemed its outstanding Sukuk on schedule in October 2020. The Company closed the year on a strong financial footing, and maintains a positive financial outlook for 2021.

Dr Patrick Allman-Ward (pictured), CEO of Dana Gas, commented:

“The world experienced unprecedented shocks in 2020 with the COVID pandemic and its impact on the global petroleum markets with prices collapsing to levels not seen for over 20 years. Nevertheless, Dana Gas has shown real resilience both from an operational as well as financial perspective.

“When the pandemic struck, our first priority was the health and safety of our staff. However, we managed to keep our operations on-stream by implementing the most stringent health and safety measures. We not only managed to keep production levels up, but we also carried out a de-bottlenecking project on our Khor Mor plant in July which added a total of 50 MMscf/d of production capacity. In December we consistently obtained record production levels of over 440 MMscf/d. This extraordinary operational performance under the most testing of circumstances is testament to the commitment, dedication and hard work of our staff who have been outstanding in this challenging time.

“Despite the challenges imposed by the global pandemic, we exited the year in a robust financial position with a strong balance sheet, having agreed upon the sale of our Egypt onshore assets, redeeming our outstanding Sukuk and entering into a new credit facility at a lower interest rate.

“In 2021, we aim to advance the development of our world class assets in the KRI, where over 90% of Dana Gas’s proven reserves of over 1 billion boe are located, while concurrently moving ahead with our plans to prepare for the drilling of the next exploration well in Block 6 in Egypt, which holds exciting, material upside potential.“

Operations & Production

Average group production declined 5% during 2020, averaging 63,200 boepd versus 66,200 boepd in 2019. Production was boosted by a 2% jump in output from the KRI, which reached 32,250 boepd. This helped to offset a drop in production from Egypt, which fell 8% to 30,300 boepd versus 33,000 boepd in 2019 as a result of natural field declines.

Fourth quarter 2020 average group production was up 2% to 63,600 boepd. The KRI added 9% to reach 33,250 boepd in fourth quarter production because of the successful completion of the plant bypass project.

The KRI and Egypt operations have continued without interruption and remain fully functioning, un-impacted by the Covid pandemic. The restarting of the expansion plans in the KRI demonstrates that all the parties working on the project are fully committed to executing the expansion project as quickly and as safely as possible. The Pearl consortium remains focused on completing the first 250 MMscf/d gas processing train in Q1 2023 and is also examining ways to bring forward the current schedule.

In 2021 the Company will prepare for the drilling of up to five development wells in the KRI which will begin the following year. It is also moving ahead on the evaluation of the highly prospective Block 6 in Egypt, interpreting the infill seismic data that was acquired in mid-2020 and planning for drilling the next exploration well in 2023.

Sale of Egypt assets

In October 2020 Dana Gas entered into a binding agreement with IPR Wastani Petroleum Ltd, for the sale of its onshore Egyptian producing oil and gas assets for a cash consideration of up to $236 million including contingent payments. The sale is on track for completion in H1 2021. The Company will retain its interests in its exciting offshore exploration concession, North El Arish (Block 6) which contains material gas resource potential in excess of 20 Tcf.

Liquidity and Collections

The Group’s cash balance at year-end stood at $108 million. The Board is considering transferring voluntary reserves into retained earnings to support dividend capacity subject to shareholder approval.

The Group collected a total of $182 million in 2020 (2019: $285mm) with Egypt and KRI contributing $80 million (2019: $138mm) and $102 million (2019: $139mm) respectively.
As of 31 December 2020, the Company’s Egypt receivables stood at $130 million (AED 477mm).

In the KRI, regular payments have been received since March 2020. The KRG maintained its commitment to pay its invoices on time despite facing fiscal challenges throughout the year. Currently, $39 million is outstanding (DG 35% share). The Company has received notification from the KRG on the mechanism for settlement of the outstanding receivables.

(Source: Dana Gas)

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Khor Mor Gas Plant reaches Record Production

Dana Gas has announced the production of sales gas from Pearl Petroleum‘s Khor Mor Gas Plant in the Kurdistan Region of Iraq (KRI) reached a new record level of 430MMscf/d on 15 December 2020.

Fourth quarter’s average gas production as of 15 December 2020 is 400MMscf/d, an 8% increase on Q4 2019’s average production of 370MMscf/d.

Pearl Petroleum has also restarted expansion plans in the KRI on the 15 December. This follows the suspension of work in March 2020 due to Covid-19 restrictions. All parties working on the project are fully committed to executing the expansion project as quickly and as safely as possible.

The Company expects to complete the first 250 MMscf/d gas processing train in Q1 2023 and is also examining ways to reduce the schedule further.

In line with the Kurdistan Regional Government (KRG) commitment to review the outstanding December 2019 to February 2020 invoices totalling $30 million, Dana Gas notes Pearl Petroleum’s confirmation of receipt of a payment plan proposal from the KRG to pay down past receivables during 2021 as long as Brent remains above $50/bbl.

Pearl Petroleum continues to engage constructively with the KRG on this matter to ensure timely payment. The KRG has maintained regular monthly payments since March 2020.

Dr Patrick Allman-Ward, CEO of Dana Gas, commented:

“Our joint operations at Pearl Petroleum continue to set new records with production output whilst maintaining an excellent HSSE track record, validating our long-term strategy to concentrate on further developing our world-class fields in the KRI. We are getting tremendous support from the KRG, which has given us the green-light to restart the civil engineering works under strict health protocols and controls.

“This clears a major hurdle and puts us on a path for first gas from the new train in Q1 2023. I am also pleased to provide an update on our Q4 average gas production, which is 8% higher at 400MMscf/d than in the same period last year.

“In addition, our commitment and contribution to the people of the KRI remains as strong as ever. Our partnership is now in its 12th year. 2020 has been very challenging due to the restrictions imposed by the global pandemic but the team has worked tirelessly to keep our operations ongoing throughout the year, adhering to strict health and safety protocol to ensure the continuous flow of gas to power the KRI’s electricity needs.”

(Source: Dana Gas)

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Successful IBBC Conference in Dubai

IBBC’s 5th Annual Iraq Conference in Dubai – Opportunity in Adversity

The Iraq Britain Business Council (IBBC) was much praised at its conference on Thursday for pioneering in COVID-19 times by bringing together senior officials from Iraq, the UAE and the UK, prominent international and Iraqi businessmen, bankers and professional advisers as speakers and over 100 delegates.

With the Address Hotel as host venue implementing the strictest hygiene regime and using video links, delegates enjoyed a day of vigorous analysis and debate about the issues currently creating the adverse conditions dominating the Iraqi political and business landscape and what measures were needed to improve matters, but nevertheless inspirational presentations highlighted success stories across a number of sectors in panel sessions covering energy, finance, infrastructure/logistics and tech.

Highlights of the day were presentations made by Mrs Zena Yousif Iraq consul general in Dubai, the first woman to ever hold that position, and the fact that all the leaders of the energy companies presenting were Iraqi nationals for the first time ever, namely Mr Zaid Elyaseri, Vice President Iraq from BP, Mr Ali Al Janabi, Chairman, from Shell, Mr Musab Alkateeb, Managing Director, from Siemens Energy, and all were addressing common global issues currently affecting that sector – low oil and gas prices, environmental and green issues.

Mr Aziz Khudairi, Chairman of the Khudairi Group with multiple businesses in Iraq urged the Iraqi Government to embrace the private sector to grow prosperity in Iraq and to provide employment for the millions of young Iraqis, to protect Iraqi businesses from unfair dumping by foreign competitors, but in return emphasised the need for the Iraqi workforce to rediscover a work ethic so that Iraqi companies would become efficient and profitable.

Baroness Nicholson made her Welcome Address by video link from London and at the end of the day announced the new annual award to be made to an Iraqi SME for its contribution to business in Iraq, in memory of the recently deceased Engineer Rasmi al Jabri, IBBC deputy chairman.

Amongst the many excellent speakers were:

  • H.E. Dr Thani bin Ahmed Al Zeyoudi, Minister of State for Foreign Trade, UAE
  • H.E. Dr Abdulkariem Al Faisal, Chairman of the Prime Minister’s Advisory Commission
  • Mrs Zena Yousif, Consulate General of Iraq in Dubai
  • Mr Simon Penny, Her Majesty’s UK Trade Commissioner for the Middle East

Conference Sponsors were Basra Gateway Terminal, Siemens Energy and Serco.

Vikas Handa of Gulftek, Conference chairman said:

“Today’s IBBC conference in Dubai is the testimony of human resilience on the face of adversity. We had unexpected turnout & great participation from the ministers, industry leaders and businesses from Iraq, UAE & UK.

“We covered a lot of ground to chart the way forward, network & learn from each other. I along with IBBC MD Christophe Michels would like to thank our key members for their unwavering support to make it happen.“

In parallel

The Tech Forum took place online, with participants from Iraq, UK, Dubai and France, to review and discuss the digitisation of Iraq, based on the World Bank’s Report in April.

Chaired by Ashley Goodall of IBBC, we reviewed how the Government of Iraq ( GOI ) and digital development in general has been evolving since April, as Alexandre Laure, the World bank Sector specialist, who wrote the report – shared with us areas of development : namely, 6 key areas : Digital inclusion, banking and finance, Investment, Infrastructure, SMEs and start-ups, skill development and linking to external digital organisations. Two areas of progress include the establishment of a Tech fund for start-ups and SME investment, and the payment of Government salaries directly to bank accounts digitally. Additionally, there are areas of deregulation for start -ups and new businesses, although the registration cost of $37500 was deemed exclusionary for most start-ups.

Jawad Abbasi of GSMA MENA said that 4G infrastructure is critical in extending internet across Iraq, and this has been put on hold for the moment. This would increase the ability of users to trade, exchange and create new products on-line, as well as boost the digital economy. Yazen Altimimi CEO of Zain Cash echoed this issue as Zain are often blamed for poor internet experience, when it’s an infrastructure issue. Zain’s consumer uptake is rapid and there is a healthy growth and interest in the digital economy as a business and consumer medium. If 4G can be delivered the economy will see a rapid upswing. In short there is pent up demand and an appetite from consumers to transact on- line, so it makes sense to deliver 4G to ensure the whole economy expands.

Laura Oliver, director of Iraq Tech Ventures, amplified the issue for start -ups and SME.s who want to trade on line, and the raised the issue of the high cost of registration that prohibits start-ups registering formally, and therefore rely on the cash economy, so they are unable to get formal credit and investment. These two issues, of 4G and registration should be straight forward to address and would make a big different to the overall digital development of the Iraqi economy, and encourage investment from external digital companies like Facebook, Amazon and Google.

In a second panel: Online Consumer behaviour, Caroline McGarr of ThinkBank – a leading research agency in Irbil, presented key finding among Iraqi consumers between 18-45, and again found a big demand for consumer goods, banking on line for an unbanked 83% of the population. In sectors such as Fashion, health and social media there is enormous pent up demand as over 50% of these people spend over 5 hours a day on-line. Again, the issue of reliable internet, useful apps and products to purchase and reliability of banking, echo the first panel’s concerns.

The overall message from both panels is that there is huge unmet demand among youthful Iraqi’s for more services, better internet, better banking (trust) and online interaction with Government and products that will be better served by better internet and the proliferation of new goods and services from SMEs and start-ups, who themselves are constrained by registration fees and investment.

A full video of the sessions, including the presentation charts can be viewed here

For more information please contact london@webuildiraq.org

(Source: IBBC)

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