The Egyptian Natural Gas Holding Company (EGAS) invites Petroleum Exploration Companies for EGAS International Bid Round 2008 to explore/exploit for Gas and Crude Oil in seven blocks situated in the Mediterranean Sea basin of Egypt

Earlier last month, EGAS has opened its doors for interested companies to review and/or purchase data (2D seismic or 3D seismic or E-logs) in the blocks of its international bid round, till the closing date set before 12:00 – O’clock at noon Cairo local time On Monday, 9th of February, 2009.
This Bid Round includes seven exploration blocks in the Mediterranean Sea basin of Egypt as shown. Bidders have to submit their offers by the closing date in two separate sealed envelopes as follows:

Sealed Envelope (1) titled “Qualifications”
This first envelope has to contain

  1. A preliminary bond in amount of $50 thousand to be submitted to EGAS by irrevocable bank letter of Guarantee or a payable cheque confirmed by an Egyptian bank, which has to be valid for not less than six months from the bid round closing date. This bond to be collected from EGAS premises by the unsuccessful bidders upon EGAS’ notification.

Within 15 days from receiving EGAS’ awarding notification to the successful bidder, the above mentioned guarantee will be increased up to an amount equal to 2% of the financial obligation of the initial exploration phase as specified in the offer. EGAS shall liquidate without any legal procedure the guarantee amount; in the following cases:

  1. The $ 50 thousand bond will be liquidated by EGAS, if
    1. The bidder withdrew before the announcement of the bid results
    2. The successful bidder failed to increase the guarantee amount of $50 thousand up to the amount of 2% of the financial obligation of the initial exploration phase as specified in the offer
  2. The 2% bond will be liquidated by EGAS, if the successful bidder withdrew or failed to deliver to EGAS the necessary documents required before the final signature date which will be determined by EGAS

The above mentioned bonds will be collected from EGAS premises by the successful bidder a week after the signing of the Concession Agreement, and after submitting the letter of Guarantee with the minimum financial commitment of the initial exploration phase.

  1. Previous experience in petroleum exploration and production and activities of the company all over the world including development projects, reserves and latest used technology supplemented by the company’s Annual Report.
  2. Article of incorporation of the company, the company’s commercial registration and copies of all documents that proves its legal existence as well as shareholders and their nationalities.
  3. Recent annual report and/or official financial reports proving the financial strength of the bidder’s company.

Sealed Envelope (2) titled “Commercial”
The second envelope has to contain proposed terms and conditions according to the Main Contract Terms and Conditions and the provisions of the Model Agreement.
These two sealed envelopes shall be submitted and hand delivered separately at the same time, which the first envelope shall be marked by qualifications, the second shall be marked commercial.
On the other hand, the contract shall be a Production Sharing Model. Contractor undertakes all risks to explore and develop both gas and crude oil. The parties to the contract shall be the Egyptian Government, the Egyptian Natural Gas Holding Company (EGAS) and contractor.
EGAS shall bear and pay out of its share, on behalf of the Contractor’s royalty and the applicable Egyptian Income Tax.
The exploration period duration shall be specified in the offer and subdivided into two phases. Total exploration period should not exceed six years, except for Blocks No. 6 and 7, the limit is eight years. The duration of any development lease shall be twenty years from the date of commercial oil discovery (in case of oil development lease) or from first delivery of gas (in case of gas development lease).
A “Five Years Extension” can be provided upon contractor’s request and submission of a complementary development or production plan to EGAS; however, this is subject to the Egyptian government’s approval.
If gas is discovered in commercial quantities and contractor failed to put such gas on production in accordance to the submitted development plan or within six years period from the date on which the contractor notifies EGAS of the existence of a commercial gas discovery, (whichever is earlier); contractor shall surrender such gas reserves and relevant development lease to EGAS. The exceptions are Blocks No. 6 and 7, the production should start in accordance to the submitted development plan or within eight years period from the date on which the contractor notifies EGAS of the existence of a commercial gas discovery, (whichever is earlier); Contractor shall surrender such gas reserves and the relevant development lease to EGAS.

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