Dana to receive Iran gas in 2008

Dana Gas’ Executive Chairman told the annual meeting of the company’s general assembly in Sharjah that preparations to receive Iranian gas have been completed and expected revenues to surge from gas sales this year.

Hamid Jaafar said 2007 was a good year for Dana Gas and revenues could be even better this year as it pushes ahead with major projects in Egypt and other countries. He also spoke of planned “Gas Cities” outside the UAE.

“For 2008, Dana Gas aims to build on the strong foundations of 2007. In addition to the expected start-up of operations and revenues from both the import of Iranian gas and the Kurdistan region’s gas projects by the middle of this year, the company is also implementing an active $170 million (Dh623.9m‚ drilling campaign of 19 wells in Egypt, where we hope to increase our gas reserves to significantly increase production, and take full advantage of high energy prices,” he said.

“In addition to our major investments and expansions in Egypt, northern Iraq, and here in the new concession offshore Sharjah, we will also be expanding our concept of developing “Gas Cities” in other countries of the region, and pursuing further opportunities and acquisitions under study in the Gulf and in North Africa.”

Iran has not commented on Dana’s statements last month that gas supplies ordered by the Sharjah-based company for sale inside the UAE would start arriving in summer this year after a delay of two years because of a dispute over prices.

Dana Gas, the first major private sector gas company in the Middle East, has not made it clear if the rift has been resolved

“Dana Gas has said many times it expects gas supplies to start arriving soon but there has been a delay of nearly two years,” an Abu Dhabi-based oil source said.

“The latest statements might only reflect Dana’s hope that Iran would begin pumping gas… but I do not think this will happen without an agreement by Dana to pay higher prices because Tehran seems adamant.”

Dana did not say whether it had reached a new agreement with the Iranians, who have demanded a revision of their tentative 2001 price deal. Tehran justifies its demand by a sharp rise in oil and gas prices over the past few years and the fact that the deal involved, what it said, was a “give away” price.

In 2001, Crescent Petroleum, which co-owns Dana Gas, signed an agreement with NIOC to import gas from the offshore Khuff reservoir associated with the Salman oilfield. But there have been repeated calls from Iranian officials to cancel the agreement and direct the gas for domestic use.

The contract to send gas to the UAE was signed following long negotiations between NIOC subsidiary Petroiran Development Company (Pedco), the operator of Salman-Khuff, and Crescent, when oil and gas prices were relatively low. Iranian sources said the agreement calls for the supply of nearly 116 billion cubic metres of natural gas to the UAE over 25 years, with the initial sale of 330 million cubic feet a day rising to 600 million in Sharjah’s Hamriyah Free Zone. Iran’s gas sales were originally scheduled for January 2006.

“The year 2007 saw Dana Gas achieve its first revenues and operating income, and make important new entries into all areas of the natural gas business in Egypt and northern Iraq, while building upon its positions and assets in the UAE,” Jaafar told the general assembly on Sunday.

Announcing results for 2007 last month, Dana Gas said revenues stood at Dh1.036 billion despite being the first year of commercial operations.