Dana Gas PJSC (DANA.AD) is willing to increase output capacity in Egypt if the government there pays “sufficient” money that it is owed for production in the North African country, the energy firm’s chief executive said Thursday.
Receivables collected aren’t enough to “allow us to go ahead with the funding plan that we had originally put in place for 2013,” Dana Gas CEO Patrick Allman-Ward told a media briefing.
Dana Gas, which has $290 million in unpaid Egyptian invoices, of which $210 million are overdue, has told the government it can up its output capacity by 25% very quickly and at low cost, if it receives sufficient payments and is allowed to sell increased output at higher price, he said.
In recent years, missed payments for energy products have been a crucial issue for Dana, which has major gas exploration and production operations in Egypt, where political instability has remained a common theme since a revolution more than two years ago.
The Egyptian government is struggling to pay over $6 billion in debt to foreign energy companies. So far it has paid Dana Gas just $65 million of the $120 million owed for this year.
Earlier this week, Egyptian oil officials told The Wall Street Journal that the country is planning to reach an agreement to restructure its debt to oil and gas companies, and could use part of the financial aid received from Saudi Arabia, Kuwait and the United Arab Emirates to make part of the payments.
“We are taking a very cautious approach in Egypt..the payments coming through are enough to keep operations going but not enough to keep investing in the country or grow,” Mr. Allman-Ward said, adding that the firm has already agreed to receive up to 65% of its payments in Egyptian pounds.
Egypt aside, Dana has also had to contend with large uncollected receivables for its products in Kurdistan, where it has to wait for sporadic payments from the Iraqi federal government to be funneled to Kurdistan’s regional government.
Payments due from the Kurdistan region of Iraq stand at around $430 million, of which between $380-390 million is overdue, Mr. Allman-Ward said.
Dana was forced earlier this year to extend the maturity of a $920 million Islamic bond due to receivables issues, prompting speculation that debt-holders may seek to seize the company’s gas fields in Egypt.