Dana Gas, the Sharjah-based natural gas company, said it is working on reducing its overall general and administrative expenditure from last year to this year by 50%.
Patrick Allman-Ward, the company’s chief executive officer told Gulf News that Dana Gas is also looking at cutting 40% of its head office jobs (translating to 20 people). The company axed jobs throughout 2015 and will continue in 2016.
“We’ve gone through an exercise once again of looking at our head office overheads, and we’ve taken action to cut those costs by 50%. We continue to look at our ongoing operating costs and operating ventures whether [they’re] in Egypt or Kurdistan to look at ways to cut out unnecessary costs from those operations,” he said.
Allman-Ward was speaking to reporters on Tuesday on the sidelines of the Middle East Gas Conference 2016 in Abu Dhabi.
In November 2015, Dana Gas reported a net loss of $9mn in Q3 2015, compared to $38mn in net profits in Q3 2014. The loss came on the back of overproduction that is also being met with weaker demand.
Discussing operations in the Kurdistan region of Iraq (KRG), the CEO said the company was yet to receive payments for its investments there after a London court ordered the region’s government to pay $1.98bn to a consortium including Dana Gas.
“We all know what the situation of the KRG is and its abilities to pay. Clearly, they are struggling to pay all contractors not just ourselves, so I think, with all the will in the world, finding $1.98 billion is going to be a step too far for them,” he said.
“We don’t expect them to pay all in one go. Clearly, that’s an impossible task but there is an opportunity, for example, to reschedule debt and come to an agreement on how that can be done,” he added.
Allman-Ward added that while the Kurdistan region had plenty of geological assets that would encourage expansion, the company needed to first make money out of its first phase of investment before looking at any future investments.
With regards to the company’s operations in Egypt, Allman-Ward said that Dana Gas’s Balsam-1 and Balsam-2 gas wells in Egypt have already come on stream, with a total production capacity of 24mn standard cubic feet (scf).
The Balsam-1 field came on stream in November producing 10mn scf, while the Balsam-2, which came on stream in December, produces 14mn scf.
Dana Gas currently produces 34,000 barrels per day of oil equivalent in Egypt, and will continue to invest in the country, Allman-Ward confirmed.
In his opening speech at the Middle East Gas conference, the CEO also commented on falling oil prices, which just hit new lows around $30 a barrel, saying that it was ‘a time of crisis for the industry’.
“We are seeing governments responding to the current crisis. Governments are now breaking the mould … Who would have thought the [Saudi] government was floating a balloon! Whether it (the initial public offering of Aramco) actually happens, we’ll have to see, but at least discussing the concept of a part privatisation of Saudi Aramco – who would have thought that possible 18 months ago? (when oil prices were around $100 a barrel),” he said.
