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Wednesday, 11 May 2016

BG, Shell reach agreement with gov’t on pricing for Phase 9B gas

BG, Shell reach agreement with gov’t on pricing for Phase 9B gas: BG and Shell have agreed to maintain a price cap of USD 5.88 per mmBtu for gas from BG’s Phase 9B of the West Delta Deep Marine Concession, acquiescing to the Ismail government. The agreement also stipulates that the price, which will be pegged to the price of crude, will not drop lower than USD 2.70 per mmBtu, sources close to the negotiation team tell Al Borsa. At current crude prices, BG will sell gas at a price of USD 4.20 per mmBtu. Work on the concession, however, will not resume until the House of Representatives approves the agreement, the state makes good on the money it owes shell (about USD 1 bn as of two months ago), and until BG is allowed to export 100-150 mcf/d of gas through its Idku terminal. BG Egypt suspended work on Phase 9A+ and 9B in March after the government rejected paying USD 7.00 per mmBtu for Phase 9B.

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