The Chief Executive Officer of Dana Gas, Patrick Allman-Ward (photo) has said that the oil market is moving towards a failure as prices are getting close to levels that are beneficial for U.S. shale producers.

Brent crude reached 31% in 2016 due to the fall in oversupply as high-cost producers are cutting back. Demand is increasing and production is being upset as a result of the outages in Nigeria and Canada.

“It will be a bit of a bumpy road going forward with prices tending to firm up in the second half,” Allman-Ward said.

According to him, this drop in prices signifies that the company has to wait longer than expected for outstanding payments owed by the Egyptian government for past gas sales.

Dana Gas had agreed to sell Egypt’s share of condensate to regain back the debt, but it is possible that it might be able to collect all the unpaid arrears only in 2019.

Allman-Ward believes that the company can still reach its target to be paid by the end of 2018 if prices rise in the global market.

Since March ending, Dana Gas increased production to around 70,000 boepd following the conclusion of a natural gas pipeline in Egypt. The 17-kilometer pipeline from the Balsam field in the Nile River delta to a processing plant in Egypt permitted the company to add approximately 10,000 boepd of new production capacity.

The pipeline was completed earlier than expected, letting the company fulfil its end-of-year goal of realizing 70,000 bbls. Further developments that has been scheduled at the Egyptian processing plants will also assist in adding a per day capacity of 10,000 to 15,000 boe by 2016 ending or early 2017, Bloomberg reports.

Anita Fatunji