Dana Gas, the Middle East’s largest regional private sector natural gas company has received an award in its favor, validating the termination of its sales and purchase agreement for its oil and gas assets in Egypt, from the London Court of International Arbitration (LCIA).
The arbitration was initiated on 28 April 2021 by IPR Wastani Petroleum Ltd., (IPR Wastani) a member of the IPR Energy Group, in relation to the Sale and Purchase Agreement (SPA) for the sale of oil and gas assets in Egypt.
The Tribunal rejected IPR Wastani’s claim in its entirety. The Tribunal ruled in Dana Gas’ favor on all key points, concluding that the Sharjah-based company’s termination of the SPA was valid, Dana Gas said in a statement to the Abu Dhabi Securities Exchange, where its shares trade.
Dana Gas canceled the $236 million deal which came last year to sell its Egyptian assets to exploration and production company IPR Wastani on April 22, 2021, after the parties were unable to complete a number of conditions precedent to the transaction by the “long-stop date” of April 14.
IPR Wastani disputed Dana Gas’ right to terminate the SPA and submitted a request for arbitration. However, the ruling in favor of the UAE energy company means the assets will continue to be operated by Dana Gas.
“The award confirms that Dana Gas was correct and within its contractual rights to terminate the sale’s process. The board has made a decision to continue to hold and operate the assets in the best interests of the company and its shareholders as well as for our broader stakeholders.”
Sharjah-based Dana Gas has been operating in Egypt for the past 14 years and is currently the fifth-largest gas producer in the country. It is currently producing around 30,000 barrels of oil per day from 14 development leases.
Dana Gas Egypt collected $23 million in the first quarter of 2021. This increased to $75 million in the second quarter following the termination of the SPA.
The Sharjah-based company said it is committed to maximizing the value of its onshore producing assets while maintaining focus on testing the enormous potential of its offshore Block 6 Concession Area, which is estimated to contain over 20 trillion cubic feet of gas. It plans to drill an exploration well currently scheduled for the first quarter of 2022 depending upon the availability of long-lead items.