UAE-based Dana Gas has been paid $60m by Egypt, as the country’s government attempts to follow through on promises to pay back all debts to foreign oil companies.

The payment to Dana Gas is part of a $2.1bn payout to foreign firms that was announced by Egypt’s petroleum ministry on 31 December.

Sherif Ismail, Minister of Petroleum and Mineral Resources said the new payments reduced the total accumulated debt to foriegn oil companies to $3.1bn.

In October, Egypt’s Energy Ministry said the government owed $4.9bn to companies, including Dana Gas, US-based Apache and Britain’s BG Group.

The $60m paid to Dana Gas represents 28 per cent of the total $212m owed to the company by the Egyptian government.

A total of $10m was paid in US dollars, with the rest paid in Egyptian pounds.

Dana Gas says the money will be used to pay debts, fund investments and pay future operational expenses in Egypt.

In September, Dana Gas signed a Gas Production Enhancement Agreement (GPEA) with the Egyptian government, agreeing to boost its production from its Nile Delta concessions.

Commenting on the payment, Patrick Allman-Ward, CEO of Dana Gas, said his company is working closely with the Egyptian authorities to fast-track the agreed production increase.

“Dana Gas is now preparing for the startup of the project and is in the process of securing materials and drilling rigs,” he said.

Dana Gas Egypt’s gas, liquefied petroleum gas (LPG), condensate and crude oil production averaged 40,000 barrels of oil equivalent a day (boe/d) in 2014, an 8 per cent increase over 2013 average production. 

Dana Gas is not the only foreign energy company that is received a payment from the Egyptian government over the last couple of days.

On 2 January BG group announced it had received $350m from the Egyptian government reducing its domestic receivables balance in Egypt to $920m.

Egypt is currently seeing its worst energy crisis in decades as demand for natural gas exceeds domestic production.

Clearing Egypt’s debts to foreign oil companies is viewed by analysts as a key step in increasing investment in developing Egyptian oil and gas fields.

In November, Egypt promised to pay off all its debts to oil companies within six months, with 60 per cent paid before the end of 2014.

Egypt has already paid two installments of dues to foreign partners. The first tranche of $1.5bn was paid in December 2013 and the second tranche of $1.4bn was paid in October 2014.