Dana Gas has agreed with the governments of Sharjah and Ajman to develop a gas field off the two emirates’ coasts with production expected to start in the first half of 2014, the company said on Thursday.
Dana is in the midst of restructuring a $920-million Islamic bond, or sukuk, after it failed to meet the payment upon maturity last month.
The gas produced will be used mainly for power generation in the two northern emirates, part of the seven-member United Arab Emirates federation, that have suffered from summer power shortages in recent years.
“Dana Gas is proud to play the positive role in developing the gas field, marking the first exploration and production project for the company in the UAE,” Dana Gas Executive Director Rashid Al-Jarwan said in a stock exchange statement.
The agreements cover the development and joint operation of the gas field, installation of an offshore platform to process gas, a 25 km subsea pipeline, and gas sales deals.
Dana has been focused on expanding in Egypt and Iraq. But payment delays for gas it supplies to Egypt and the Kurdistan region of Iraq were major contributors to debt problems which saw it become the first UAE firm to fail to repay a bond upon maturity.
The natural gas producer, headquartered in Sharjah, said on Nov. 7 it had reached an agreement in principle with creditors on restructuring the sukuk, and would pay holders a mix of cash and two new bonds. The new bonds would be a sukuk and a convertible sukuk.
Detailed terms of the restructuring and the proposed new sukuk are yet to be made public.