October 1, 2014 / 6:03 AM / in 3 years

MIDEAST STOCKS-Abu Dhabi's Dana Gas may gain on new Egypt deal

DUBAI, Oct 1 (Reuters) - Energy firm Dana Gas may support Abu Dhabi’s bourse on Wednesday after signing a deal with Egypt that will help it to recover most of the $280 million it is owed by the Cairo government.

Political turmoil and violence since the 2011 revolt that ousted Egyptian leader Hosni Mubarak has hit the economy hard and Egypt has struggled to pay foreign companies for gas, with some major gas projects grinding to a halt at a time when generous state subsidies are stoking demand.

Dana says it is owed $280 million in outstanding payments but that a new Gas Production Enhancement Agreement (GPEA) will permit it to drill 37 new wells and redevelop existing ones, providing additional condensate production that it can sell on the international market.

Egyptian investors are also likely to react positively to the news, seeing it as a sign of the improving business climate. Separately, Oil Minister Sherif Ismail said on Tuesday that Egypt aimed to pay back $2 billion to $3 billion it owes to oil and gas companies by the end of the year.

Elsewhere in the region, Saudi Electricity Co may rise after winning contracts worth 2.56 billion riyals ($682.4 million) to supply power to the Riyadh metro which is currently under construction.

Meanwhile, the global backdrop is negative: Asian shares slumped on Wednesday as continued civil unrest in Hong Kong and a downbeat day on Wall Street sapped confidence. (1 US dollar = 3.7513 Saudi riyal) (Reporting by Olzhas Auyezov; Editing by David French)

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