More gas work slated in Egypt

SHARJAH, United Arab Emirates, June 8 (UPI) -- Emirati energy company Dana Gas said it started a new drilling campaign in Egypt in a deal that gives it the right to sell the government's share of reserves.

The company said it will spend the next four months drilling into the Balsam-2 concession onshore in the Nile Delta region, the first of an estimated 30 new wells covered under a gas production enhancement agreement.

"Balsam-2 is the company's first horizontal well in Egypt and is a fitting well to kick off this drilling campaign which effectively targets to develop all the Company's remaining conventional gas reserves," Mark Fenton, Dana's general manager for Egyptian operations, said in a statement.

Dana under the terms of the agreement is afforded the right to sell the Egyptian government's share of production of condensate, an ultra-light form of the reserves, at market rates. The Emirati company is one of the largest onshore producers in Egypt and said it's "firmly committed" to its partnerships in the region.

Dana reached a deal last week with British energy company BP to cover as much as 50 percent of the drilling costs at onshore license areas held by the Emirati company, which in January received $60 million from the Egyptian government to cover its outstanding debt.

Political and economic instability in Egypt left the government in debt to energy companies eager to tap the country's natural gas potential.

BP last year committed to investing $240 million on developing two new exploration blocks near the Nile Delta and in the northwestern Egyptian waters of the Mediterranean Sea through a partnership with Dana Gas.