Annual Report 2010
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Annual Report and Accounts 2010 From the Region, by the Region, for the Region Annual Report and Accounts 2010 From the Region, by the Region, for the Region Our Vision Our Values To be the leading private sector natural gas • We set and apply the highest standards of company in the Middle East, North Africa conduct and accountability and South Asia (MENASA) region generating value for our stakeholders • We respect and value everyone and embrace all kinds of diversity Our Strategy • We strive to devise and implement innovative ways to improve our business • Focus on sustainable growth in the MENASA region and fulfill our commitments across the natural gas value chain • We aim to provide a safe, healthy and • Leverage strategic relationships to maintain environmentally friendly workplace for competitive advantage our employees and business partners and to minimise the adverse effects of • Continuously enhance our technical and commercial our operations on communities and the skills to develop and operate assets safely and efficiently environment El Wastani Plant, Egypt Contents Group Operational Footprint ....................................................................................8 Group 2010 Highlights ..............................................................................................10 Group Structure ........................................................................................................12 Chairman’s Statement. ...........................................................................................13 Chief Executive’s Operational and Financial Review .........................................17 Health, Safety, Security and Environment .............................................................27 Risk Management ....................................................................................................31 Corporate Governance ..........................................................................................35 Our People ................................................................................................................49 Corporate Social Responsibility ..............................................................................53 Auditors’ Report and Financial Statements ..........................................................57 Glossary Bcf Billions of standard cubic feet AED United Arab Emirates Dirham MMboe Millions of barrels of oil equivalent bpd barrels per day MMb Millions of barrels boepd barrels of oil equivalent per day Tcf Trillions of cubic feet kboepd thousand barrels of oil equivalent per day MMscfpd Millions of standard cubic feet per day Gas is converted to barrels of oil equivalent using a conversion factor of 6000 standard cubic feet per barrel. Annual Report and Accounts 2010 Group Operational Group Operational Footprint Footprint Iraq Kurdistan Region In the Kurdistan Region of Iraq, Dana Gas holds a 40% interest in Pearl Petroleum Company Ltd. (PPCL) jointly with Crescent Petroleum (40%), OMV (10%) and MOL (10%). PPCL operates the Khor Mor Field which during 2010 produced gas at a gross rate of 150 MMscfpd and condensate at a gross rate of 7400 bpd, the gas being supplied to two power stations in the region. Construction of a 300 MMscfpd gas processing plant has been completed, with LPG production commencing in January 2011. Appraisal work on Khor Mor and Chemchemal Fields is required to delineate the fields and progress full development plans. Longer term plans are to increase production capacity to meet local gas requirements and Offices for export regionally and to Europe. UAE Gas Project The UAE Gas Project to process and transport 600 MMscfpd of imported gas from Iran awaits commencement of gas deliveries. Dana Gas owns a 35% interest in Crescent Natural Gas Corporation Limited (CNGCL), the marketing organisation, and owns 100% of UGTC and Egypt Sajgas which respectively transport and process the gas. Dana Gas Egypt UGTC owns 50% of a joint venture with Dana Gas Egypt holds three Exploration Emarat which has developed a 48-inch Concessions in Egypt. It is the 100% operator diameter gas pipeline in the UAE, with a of two Exploration Concessions and produces capacity of 1000 MMscfpd to transport from eleven fields in the Nile Delta and is a 50% gas in Sharjah. joint operator of one Exploration Concession and produces from one field in Upper Egypt. During Sharjah Offshore Concession 2010, the Company produced 77 Bcf of gas and In the UAE, Dana Gas is the 100% operator 2.6 MMb of liquids, an average rate of 42.3 kboepd. of the Sharjah Offshore Concession. During The focus for 2011 will be to develop a new gas 2011, the development of the Zora Field, processing plant to the East of the Nile which, which straddles Sharjah and Ajman waters, in mid-2012, will increase total gas processing will commence with production scheduled to capacity in the Nile Delta to 400 MMscfpd. commence in mid/late 2012 at a rate of 50 to 60 MMscfpd. Gas Liquids Extraction Plant On the Gulf of Suez, Dana Gas holds a 26.4% interest in the development of a LPG recovery plant which is due to come on stream in mid-2011. 8 Dana Gas PJSC Annual Report and Accounts 2010 Dana Gas PJSC Annual Report and Accounts 2010 9 Annual Report and Accounts 2010 Group 2010 Group 2010 Highlights Highlights Operational Financial Production Growth (kboepd) Revenue (in AED Million) 2000 60 2000 2000 60 6060 2000 2000 60 60 Iraq Egypt 2000 IraqIraq EgyptEgypt IraqIraq EgyptEgypt Iraq Egypt 50 13.2 50 5050 1500 50 13.213.2 13.213.2 1500 15001500 50 13.2 15001500 40 40 4040 7.5 40 40 7.57.5 7.57.5 1000 7.5 2.0 1000 10001000 1,785 2.0 30 2.02.0 1000 1,785 1,785 30 2.02.0 1000 1,785 1,785 30 3030 42.3 1,785 30 42.3 42.3 1,279 42.3 34.7 42.3 1,279 500 1,036 1,139 1,2791,279 34.7 42.3 34.7 500 1,036 1,139 1,2791,279 1,036 1,139 20 34.720 28.9 28.9 34.7 500 1,036 1,139 500500 1,036 1,139 20 28.9 28.9 34.7 2020 28.928.9 28.928.9 500 1,036 1,139 20 28.928.9 28.928.9 10 10 1010 0 0 10 10 2007 2008 2009 20072010 2008 2009 2010 0 00 2007 2008 2009 2010 2007 2008 2009 200720072010 20082008 20092009 20102010 0 2007 2008 2009 200720102007 20082008 20092009 20102010 2007 2008 2009 2010 20072007 20082008 20092009 20102010 Production Replacement Ratio EBITDAX (in AED Million) 2000 2000 20002000 20002000 400% 400% 400% 400% 400% 1500 1500 400% 15001500 15001500 1000 1000 10001000 200% 400%200% 400% 10001000 400%200%200% 400%400% 200%200% 360% 400% 360% 1,440 1,440 360% 360%360% 500 500 1,034 1,4401,440 1,034 360% 229% 229% 1,4401,440500 229%229% 500 500 1,034 1,0341,034 229%229% 500 575 1,034 575 478 575 478 575575 575 478478 0% 0% 0 478478 0 0% 0 0% 2007 2008 20090% 20072010 2008 2009 2010 0 2007 2008 2009 0 2010 0% 2007 2008 2009 2010 0 2007 2008 2009 2010 2007 2008 2009 20072010 2008 2009 2010 2007 2008 2009 200720072010 20082008 20092009 20102010 2007 2008 2009 2010 (2P Reserves Basis) 2007 2008 2009 2010 EBITDAX trend rising strongly, 2009 being above trend as a result of assets sales Proved Plus Probable Reserves (MMboe) Profit after Tax(in AED Million) 300 200 1P 300 1P 200 300 1P 200200 300 1P 300 1P 200 300 1P 200 2P 2P 2P 2P 2P 150 150 200 2P 150 3P 200 3P 150 150 200200 3P 150 200200 3P 3P 3P 100 228 253 100 228 253 100 100100 158 100 100 228228 253253 100 158 158 100228 228 253253 120 158158 100 132100 152 158 132 152 50 111 111581 158 120 100 158158 132 152 88 50 120120 67 86 94 158158 132 152 132 152 111 120120 50 111111 88 46 56 47 132 8967 152 86 94 50 111 50 88 86 46 67 8686 56 94 47 89 50 88 88 0 67 86 94 4646 67 5656 94 4747 8989 88 4646 672007 5656 942008 4747 20090 8989 2010 0 0 00 2007 2008 2009 2010 0 0 2007 2008 2009 2010 2007 2008 2009 00 2010 2007 2008 2009 20072010 2008 2009 2010 0 0 2007 2008 2009 2010 2007 2008 2009 2010 20072007 20082008 20092009 20102010 20072007 20082008 20092009 20102010 Egypt Safety Exploration Cash generated Consistency Capex Five new fields were brought 6.8 million man hours worked Three years of continued from operating Dana Gas generated four Capital expenditure AED 740 on stream in Egypt’s Nile with zero fatalities. There exploration success with quarters of consistent profits in millon, down from AED 924 Delta contributing to the 20% is a focus on health, safety, sixteen discoveries, and risked activities 2010, with minimal exploration million in 2009 as facilities in the increase in production in Egypt security and the environment resources in the Egypt Nile write downs and asset value Kurdistan Region of Iraq were and a 90% increase in proved across the group Delta of 1.8 trillion cubic feet reduction, reflecting the strong brought into production reserves and 15% in proved of gas +25% balance sheet plus probable reserves 10 Dana Gas PJSC Annual Report and Accounts 2010 Dana Gas PJSC Annual Report and Accounts 2010 11 Group Structure Dana Gas PJSC Dana Gas SajGas UGTC CNGCL Pearl Danagaz GasCities Chairman’s Statement Egypt Petroleum 100% 100% 100% 35% 40% 66% 50% Diagram shows a simplified Group Structure EBGDCo 40% 12 Dana Gas PJSC Annual Report and Accounts 2010 Annual Report and Accounts 2010 Chairman’s Chairman’s Statement Statement These realities underpin the original vision of our founders to create a MENASA Region gas “ champion in Dana Gas I am pleased to report that Dana Gas achieved commendable performance during 2010, despite challenging global economic conditions Hamid Jafar Chairman of the Board I am pleased to report that Dana Gas achieved champion in Dana Gas, and we remain true to and rationalising the Company’s cost base. and proved plus probable reserves have commendable performance during 2010, that vision. The Company continues to develop The management team is also putting in place increased by 15% to 152 MMboe.