Fueling the industry with foreign investment

Over the last quarter of 2009, rumors spread in every corner in the country claiming that major foreign companies plan to decrease, if not discontinue, the volume of their investments and operations in the country due to the deteriorating status of the industry. Some said that foreign partners do not get their share from the EGPC and that negatively affected their financial standard. That is why we raised the question: what is the investment budget of foreign companies in 2010?

Despite the suspicious mood dominating the beginning of 2010 in terms of economic recovery, there is an optimistic vision for a better market condition in 2010. Many analysts believe that the shadow of last year crisis is getting to an end and that the already taken precautions enable more secured plans for the new year operations.

Chief Executive of the Egyptian General Petroleum Corporation (EGPC), Abdel Alim Taha praised the continued flow of national and foreign investments at a record pace -despite the financial crisis during the year (2008/2009)- about $8.9 billion, including $7.5 billion foreign investment in research and exploration, gas and petrochemical projects, in addition to $2 billion investment to drill 520 exploratory wells that support Egypt’s oil reserves.

Taha said that according to plans, Egypt’s production of crude oil and condensates reach two million barrels per day during the year (2009/2010), pointing to the increased rates of domestic consumption of oil and gas products to 6% annually.

Paving the road for investments and solving any pending problems with foreign companies, the Egyptian Minister of Petroleum Eng. Sameh Fahmy held a number of meetings with top management of several international companies to discuss their 2010 plans.

BP to invest $10 billion
British Petroleum (BP) Chief Executive Officer, Tony Hayward announced that BP on the verge of spending $10 billion on the gas and oil exploration in Egypt in the next upcoming years.

“The company will invest $10 billion in the Egyptian market in the coming few years.” said Hayward.

These statements were made after BP chief executive met with the country’s prime minister, Ahmed Nazif and the Minister of Petroleum.
BP and the Italian multinational oil and gas company Eni SpA offered the Egyptian government a second LNG train at Damietta with a capacity of around two billion cubic meters per year.
Eni SpA has stakes in the LNG processing unit already functional at Damietta, in association with Spain’s Union Fenosa.

Apache boosts Western Desert investments
U.S. Apache Corp agreed to invest an additional $1 billion on gas and oil exploration, specifically in the Western Desert.
Over the past 15 years, Apache’s investments in the country have reached $8 billion. The American corporation has an outstanding portfolio in Egypt and has reflected its interest in the Western Desert with three oil and gas discoveries achieved last April.

Apache is categorized as the largest producer of liquid hydrocarbons and natural gas in the Western Desert and the second largest in Egypt. The company’s production totaled 26% of the region’s production at the end of the 2009 third quarter, which was 450,247 barrels per day (bpd).

According to Apache analysis, during the third quarter 2009, the Egypt Region achieved new daily gross production records for gross oil and condensate at 174,600 barrels per day (Bpd) and gross gas at 807 million cubic feet of gas per day (MMcfd). Net production was 155,600 Boe per day, a 1.6 percent decrease from the second quarter, while gross production increased by 16,700 Boe per day or 6 percent, from 273,800 to 290,500 Boe per day. The region completed 134 of 146 wells and conducted 650 workovers and recompletions through the third quarter 2009.

On the edge for more BG operations
At the end of 2009 Q3, BG group announced that their total capital investment counted for £1 419 million comprised investments in Americas (£906 million), Europe and Central Asia (£251 million), Africa, Middle East and Asia (£207 million) and finally Australia (£55 million). LNG total operating profit for the quarter was £304 million.

BG Group’s share of operating profit from liquefaction activities increased by 25% to £45 million principally due to higher profits at Egyptian LNG and the effects of the stronger US$/UK£ exchange rate. Although the company has not announced its 2010 plan yet, industry analysts expect more involvement and higher investment budget.
Last August, BG Egypt announced the delivery of first gas from the Sequoia subsea development located 90 kilometers offshore Egypt in the Mediterranean Sea.

Straddling both the West Delta Deep Marine and Rosetta concessions, the Sequoia unitized development brings into production six new subsea wells, three located in each of the concessions, which will help maintain overall plateau production.

By Yomna Bassiouni


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