Turning Natural Gas into Gold: Dana Gas’ Success Story

Dana Gas is the first and largest private sector gas company in the Middle East. Since incorporation in 2005, the company has transformed the energy industry of the area. The company is listed on the Abu Dhabi Securities Exchange, operating in the three countries of the UAE, Egypt, and the Kurdistan Region of Iraq (KRI). It specialises mainly in the exploration, production, and distribution of natural gas. With portfolio of assets and a passion for long-term growth, Dana Gas is playing a major role in the energy transition, maintaining its head of ensuring energy security in the Middle East.

The company also has sizeable interests in the Kurdistan Region of Iraq (KRI) through interest in Pearl Petroleum, the consortium running the exploration and development of the region’s natural gas fields. These operations are crucial in supplying power to northern cities in Iraq, including Erbil and Sulaymaniyah, through electricity and industrial use of gas. The company has signed a 10-year gas sales agreement with the Kurdistan Regional Government (KRG), which plays a primary role in firing up power plants in the region. With steady expansion of production capacities in the Khor Mor and Chemchemal fields, Dana Gas is expected to take a lead role in regional energy independence.

Dana Gas has signed a 20-year agreement with the KRG in 2019 to expand its operations. Though the companies had past disputes with the KRG over rights and payments, but they managed to settle many, such that the KRG paid $600 million to Dana Gas as part of an amicable settlement. That fortified the financial stability of Dana Gas but at the cost of a more lucid and harmonious approach to regional energy development. Dana Gas has been part of Egypt since 2007 and has contributed a lot towards the energy yield of Egypt. The company runs a chain of natural gas fields in Nile Delta and produces approximately 37,000 barrels of oil equivalent per day. It ranks as one of the biggest producers in Egypt and is essentially focused on developing and expanding its concession. Major gas discoveries in Egypt have made Dana Gas the country’s most significant player in the energy sector.

Dana Gas has been exploring higher potential blocks that have proven to hold additional reserves. The company recently discovered reserves in the Nile Delta and is currently developing new fields in that regard, placing it in a position to realize opportunities created by Egypt’s increasing demand for natural gas. Dana Gas owns the Zora Gas Field in the UAE. Even though this is a relatively smaller-scale project than its Egypt or Iraq operations, it remains an essential gas supplier to the local economy. The field produces about 1,650 barrels of oil equivalent per day and supports Dana Gas’s overall strategy of using regional assets to chase a secure energy supply.

The company recently issued convertible Islamic bonds called sukuk to fund its growth? That’s Dana Gas’ ability to combine age-old practices in the energy industry with ways that are more contemporary and modernized in finance. The company has been negotiating an allegation of a legal dispute over sukuk worth $700 million, claiming that the original terms have changed and, therefore are not Shariah-compliant any more. An unusual step by the standard set up in the Islamic finance space, Dana Gas is said to eventually reach a settlement with its creditors by issuing new sukuk valued at $530 million.

With its reserves in excess of 1 billion barrels of oil equivalent and with a group average production of over 60,000 barrels of oil equivalent per day. Improving operational efficiency, expansion of production capacities, and maintaining a healthy balance sheet are all on the order of business for this company-and it puts it clearly ahead of the fray in the region’s energy sector.