Wednesday, March 07, 2012
Dana Gas sukuk news analysis (update)
In a news analysis I wrote for The Islamic Globe about the Dana Gas sukuk, I wrote about the focus by investors on the ability of Dana Gas to turn receivables into cash in Egypt. I wrote: "Fortunately for Dana Gas, its production in Kurdistan through the Pearl Petroleum Co., of which it owns 40%, has continued to grow, although there is a problem collecting receivables there as well, albeit less severe than in Egypt. " However, new developments in Iraq may put the Kurdistan projects at risk. The central government of Iraq has long maintained that oil deals with the Kurdistan Regional Government are invalid and the government has not been shy about making life difficult for companies that do deals directly with the regional government, even oil majors like ExxonMobil. Exxon has not made a final decision about whether to abide by the central government's wishes or continue with its agreement with the regional government, but its decision could provide clarity on whether the Iraqi government is able to overturn existing contracts signed with the regional government. For Dana Gas, this clarity could be a positive, or another source of uncertainty about its ability to continue growing its production in Iraq, that provides a bright spot amidst continued uncertainties in Egypt.