More Russian wave to flood into Egypt

Becoming today’s world hub, economically and industrially, Russia has been symbolizing the ideal gateway for most nations seeking prosperity and wealth by strengthening mutual ties. Following this strategy, Egyptian officials have worked closely with their Russian counterparts to revive the mutual cooperation between the two countries and bring more investments in the country

During the fruitful visit of the Egyptian Prime Minister Ahmed Nazif to Russia, accompanied by the Minister of Petroleum Eng. Sameh Fahmy, two new cooperation agreements in the fields of mineral resources and natural gas were singed. The first between the Egyptian Mineral Resources Authority (EMRA) and the Russian company for Mining “Vertex”, the second one is signed with the Russian Mining University.
Eng. Fahmy stated that both agreements boost the bilateral relations and long term partnership between the two countries, based on achieving mutual benefits and implementing joint projects in the field of scientific research in the activities of exploration, mineral resources development, exchanging and transferring academic and practical expertise.

In addition, the agreements included carrying out joint researches and discussing the possibility of implementing mining projects of the Russian companies in Egypt as well as forming an executive committee of experts from both countries to put the two cooperation agreements into force.
“I am very happy to be receiving such a high-ranking Egyptian delegation. Egypt is certainly one of Russia’s priority strategic partners, without exaggeration,” said the Russian Prime Minister Vladimir Putin.

“We have a long history of friendship, interaction and practical cooperative work. We believe Egypt to be a leading Arab country. I am happy to have this opportunity of discussing the situation in the region with Dr. Nazif, to talk about development of bilateral contacts, especially economic ones,” added Putin.
“In this connection, I would like to point out the clear progress in our trade and economic contacts, which is borne out by statistics. Bilateral trade has grown fivefold since 2003 to hit the $4.2 billion mark,” highlighted.

“Energy partnership is also promising. Such Russian companies as LUKOIL and Novotek are already working in Egypt, and certain companies, Gazprom, for example, are interested in investments and production,” he stated.

Concerning the so-called Gas Exporting Countries Forum, he commented, “We are promoting this idea. We are well aware of certain consumer countries’ apprehensions. They are ungrounded, I assure you. We are not setting up a cartel, and we do not intend to sign cartel agreements. None of us intends to cede even the slightest part of our independence in decision-making. However, energy producing and consuming countries should be equally entitled to the right of coordinating their actions, exchanging information, and doing everything in their power for smooth energy supplies to the world market. More than that, I think it is those countries’ duty. Main consumers should be entitled to reliable and unbroken supplies with fair and economically sound pricing. As we all know, Moscow will host the next meeting, and our Egyptian partners have confirmed their desire to attend and their interest in Forum activities.”

Commenting on the same point, the Egyptian Prime Minister said, “Egypt has previously taken part in the work of the Gas Exporting Countries Forum. Indicatively, Cairo hosted its 5th ministerial meeting. We look forward to the 7th meeting, which will gather in Moscow, as Mr. Putin said. I fully agree with him on the need for gas exporting countries’ coordination. It is their right, and no one should regard the exercise of that right as a threat to gas consuming countries”.

LUKOIL is Russia’s largest oil company and its largest producer of oil. in terms of proven oil and gas reserves , LUKOIL is classified as the second largest public company (next to ExxonMobil). LUKOIL carries out exploration and/or production of oil and gas in Russia and (as of 2008) ten other countries: Kazakhstan, Azerbaijan, Uzbekistan, Egypt, Iran, Iraq, Colombia, Venezuela, Belgium and Saudi Arabia.

In Egypt, 13 wells were launched as part of the Meleiha project, which produced an average daily oil flow of 43 tons. An extension of the concession agreement for the Meleiha block up to 2024 came into force in 2007. A total of 5 new production wells are to be drilled in the project. The share of production of LUKOIL Group in Egyptian projects remained at its level in 2006 (200 thousand tons).

Regarding the place reserved for LUKOIL Overseas Holding in Africa, Andrey Kuzyaev, Vice President of LUKOIL, told Oil of Russia magazine that it was exactly in North Africa that LUKOIL acquired one of the first foreign producing projects – the Meleiha block in the Western desert of Egypt even before LUKOIL Overseas has been set up. We acquired another producing asset in Egypt 6 years ago, the WEEM block near Hurgada. Both projects are relatively small but highly efficient; LUKOIL share in the production volume in these projects exceeds 200 thousand tons of oil annually.

Since 2006, Egypt has been holding talks with Russia’s largest state-owned gas monopoly, Gazprom to carry out its operations in Egypt.
Gazprom discussed with Rashid Petroleum Co. and the Egyptian Natural Gas Holding Co. possible means of selling Russian oil-and-gas equipment to Egypt. The three companies will work together to search for and explore Egypt’s oil and gas reserves.

Although no activation of these discussions were made since then, the latest visit of Dr. Nazif revived the issue once more and the two sides agreed to set a schedule to activate the cooperation agreement.

Last year, on September 27, Novatek made its first foray overseas, when the Russian company bought 50 percent in a concession agreement for oil and gas exploration and development of the El-Arish offshore deposit in Egypt from Tharwa Petroleum S.A.E.
Novatek, Russia’s second-largest gas producer after gas export monopoly Gazprom announced that it would develop the El-Arish offshore block along with Egypt’s Tharwa Petroleum, which will hold the remaining 50 percent.

“Our participation in the concession is consistent with Novatek’s long-term strategy of expanding its resource base and geographically diversifying its core activities in order to establish a stable base for production growth,” Novatek’s Chief Executive Officer Leonid Mikhelson said in a statement.
The offshore block, comprising an area of approximately 2,300 square kilometers, is located along the Mediterranean coast and is adjacent to the north coast of the Sinai.

Half of the block lies at depths of up to 50 meters with the remaining area reaching depths of up to 500 meters.
The concession agreement provides for a minimum exploration period of four years which will include undertaking geophysical studies of the concession block as well as the drilling of two wells.


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