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Tuesday, 21 January 2020

EGPC signs USD 450 mn in oil and gas E&P agreements

EGPC signs USD 450 mn in oil and gas E&P agreements: The state-owned Egyptian General Petroleum Corporation (EGPC) yesterday signed nine oil and gas exploration and production agreements that will see companies invest at least USD 452 mn to drill 38 wells in concessions in the Mediterranean and Western Desert, the cabinet said in a statement. The House of Representatives authorized the ministry last month to sign off on the agreements, which also include signature grants worth USD 84 mn.

Who’s working on the concessions? Shell has signed four agreements to drill 23 wells in the the Western Desert’s East Horus, Abu Sennan, Western Fayoum, Badr-2 and Badr-17 concessions. The Dutch oil giant will invest at least USD 117 mn and receive USD 61 mn in additional grants to develop the fields. EGPC signed two agreements with Apache, which will invest at least USD 26.3 mn to drill 10 wells in the Western Desert’s West Knaiss and West Kalabsha concessions, receiving USD 10 mn in grants. State-owned gas company EGAS signed two agreements with Shell and Malaysia’s Petronas that will see at least USD 309 mn invested into drilling five wells in the Al Fanar and North Sidi Gaber concessions, with USD 13 mn in grants.

Changes to gas price from Mediterranean El Burg concessions: The government also signed an agreement with Shell and BP to change the price of gas pumped from the El Burg and North El Burg concessions in the Mediterranean. The statement did not disclose further information.

Will these concessions be operated under the new production sharing terms? It remains unclear whether the agreements will be subject to the friendlier oil and gas sharing terms rolled out by the ministry earlier this year. The new terms, which will be applied in a tender the South Valley Egyptian Petroleum Holding Company (Ganope) launched for 10 oil and gas exploration blocks off the Red Sea coast back in March, give producers larger portions of output in a bid to cut the time it takes for them to hit profitability on any one concession, as well as raise the cost-recovery ceiling on contracts.

Looking ahead: EGPC plans to drill 40 new exploration and development wells with investments of EGP 2.6 bn, and bring its total production to about 106 bbl/d in FY2020-2021, according to figures in the Oil Ministry’s planning budget picked up the local press.

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