Dana Gas Egypt (DGE) has been operating in Egypt since 2007, where it has focused on developing and providing natural gas and gas liquids, including condensate and liquified petroleum gas (LPG).
Since then, the Company drilled more than 30 exploration wells with a commercial success rate of over 60%, more than doubling the volume of recoverable hydrocarbons (gas and liquids). To be able to make this achievement, Dana Gas invested over $2 billion in Egypt and in that process, the Company created over $10 billion of value for the Egyptian economy as a whole. Not just through its gas condensates and LPG sales, but through the additional added value that was contributed to the economy through direct and indirect job opportunities.
DGE operates 14 development leases onshore in the Nile Delta in 4 concession Areas, all with a 100% working interest. In order to improve economics and allow further investments in the concession areas, Dana Gas has actively engaged in negotiations with EGAS to revise the existing terms of 3 of the onshore concessions and relinquishment of the 4th concession comprised of a single development lease which is no longer producing.
Dana Gas’ interest in the North El Arish (Block 6) offshore concession expired in March 2022 and was subsequently relinquished.
Dana Gas also had a partial interest in an LPG recovery plant in the Gulf of Suez. This interest was sold in 2021.
Gaffney, Cline & Associates Limited carried out an independent evaluation of Dana Gas Egypt’s reserves as at 31 December 2022. Following this review, the Company’s Egyptian 2P reserves stood at 42.1 MMboe, compared to 43.5 MMboe at year end 2021, only a small decline. 85% of the annual production of 9.5 MMboe were replaced, mainly due to better commodity prices and improved concession terms.
At the moment, Dana Gas focuses its exploration, development and production activities in the onshore area of the Nile Delta.
DGE’s operations in the Nile Delta commenced in 2007 when it purchased the assets of Centurion Corporation, which operated two onshore concessions. Over the years, DGE was awarded two more concessions and has very successfully progressed exploration activities which led to a substantial number of discoveries and a significant increase in company reserves. The company currently holds four onshore concessions: El Manzala, West El Manzala, West El Qantara and North El Sahiya, covering a total area of 796 square kilometres.
Production currently comes from approx. 30 wells, connected via an extensive, 600 km pipeline network which brings all production to the El Wastani gas plant for further processing and separation of dry gas, condensate and LPG. All operations are managed and operated by a requisite joint venture between Dana Gas and the Egyptian Natural Gas Holding Company (EGAS) with the name El Wastani Petroleum Company (WASCO).
The plant was originally commissioned in March 2002 as an early production facility and through a number of expansions the capacity was increased to 150 mmscfpd at the time of acquisition by Dana Gas Egypt. Through further debottlenecking, plant throughput was expanded to a nominal processing capacity of 200 MMscfpd, with the plant reaching a peak throughput of 270 MMscfpd in May 2011. The gas processing plant is equipped to separate wet gas into dry gas, liquid condensate and LPG. The processed products are sold and delivered to the local market.
In 2022, the Company’s year-on-year output fell 8.4% to 25,900 boepd due to natural field declines. This production consisted of average daily production of 125 MMscf of gas, 2,757 bbl of condensate and 206 tonne of LPG.
Since the end of 2021, Dana Gas has engaged in negotiations with EGAS to consolidate 3 of its 4 concessions into a new concession with improved terms (including the awarding of an additional 296 square kilometers of exploration acreage) which would allow further investments to be made, a win-win for both parties, Dana Gas as well as for EGAS. The 4th nonproducing concession is slated for relinquishment.
The negotiations were successfully concluded during 2022 and the EGAS Board approved the consolidation terms in early December 2022. The new terms still need to be approved by the Egyptian parliament which is expected later in 2023.
The revised terms significantly improve the economics of any future exploration and development activities. In exchange for the improved terms, Dana Gas has identified a number of development and exploration activities, which under the proposed new terms will become economic and add production and reserves thus further extending the life of the assets. These activities include drilling 3 exploration wells within newly awarded acreage and 8 infield exploration/development wells.
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