Monday, Jan 15, 2007
By Ayesha Daya
OF DOW JONES NEWSWIRES
DUBAI (Dow Jones)--Saudi Iron and Steel Co., or Hadeed, is in negotiations to build a steel plant in the United Arab Emirates with gas needs supplied by Dana Gas (DANA.AD), according to people close to the matter.
Last month, Hadeed parent company Saudi Arabian Basic Industries Co., or Sabic, (2010.SA) visited Dana facilities in the Emirate of Sharjah to confirm the company would be able to supply Hadeed, a Dana official told Dow Jones Newswires.
Following the visit, the official said Sabic "is confident Dana Gas will meet the contractual obligations" for gas supply.
"We are still in discussions," a senior Sabic official told Dow Jones by phone last week, adding he couldn't comment further until a deal is reached.
Hadeed didn't return phone calls, but a deal with Dana Gas would fit in with its strategy - as outlined last September - which is to conduct mergers and acquisitions and joint ventures with companies that already have access to natural gas.
The Hadeed plant, if confirmed, will be the fourth in the Hamriyah Free Zone in the emirate of Sharjah, joining Modern Steels Ltd. (513303.BY), Essar Steel Ltd. (500627.BY) and Al Tuwairqi Group plants. HFZ refused to comment on the prospective steel plant.
As well as the proposed steel plant, Dana Gas is looking forward to further cooperation with Sabic, this time in Saudi Arabia.
"Almost 45% of our shareholders are from Saudi Arabia," the official said. "So we have a point of contact in Saudi."
The discussions with Sabic are the latest signal that Dana Gas' deal to supply gas from Iran, a long-awaited project that represents the cornerstone of its strategy, is still on, despite months of delays. The official wouldn't confirm whether a price had yet been agreed, but said the UAE could expect gas to arrive "at the beginning of the second quarter."
-By Ayesha Daya, Dow Jones Newswires; +971 4 2279520; ayesha.daya@dowjones.com
(END) Dow Jones Newswires
15-01-07 1053GMT
