BP Plc and RWE AG changed the terms of two natural-gas production contracts in Egypt, ending a requirement that the government invest in developing offshore fields, the companies and Oil Ministry said.

BP and RWE’s oil and gas unit RWE Dea said they will pay royalties to Egypt’s government under revised terms for the North Alexandria and West Mediterranean Deepwater concessions. Egypt has the third-largest gas reserves in Africa after Algeria and Nigeria, with 77.3 trillion cubic feet at the end of 2009, according to London-based BP.

Production at the two fields is forecast to reach 1 billion cubic feet per day, with first gas expected in 2014, BP said in an e-mailed statement. RWE Dea, based in Hamburg, said in a separate statement that it will invest $3.6 billion in developing the fields in the West Nile Delta, 40 kilometers (25 miles) off Egypt.

“We used to have a production sharing agreement that said the state should invest,” RWE Dea Chief Executive Officer Thomas Rappuhn said in an interview in Cairo. “This has been changed. We pay royalties for what we have invested and produced,” he said, offering no details about the planned payments.

The Egyptian Oil Ministry said in a statement that both companies will make the investments necessary to develop the gas fields.

“The most important thing about the agreement is that it makes an obligation for the foreign partner to start output at a specific date and produce a certain amount,” Abdel Alim Taha, a senior Oil Ministry official, told reporters.

BP has a 60 percent stake in the North Alexandria concession, with RWE Dea holding the remainder. The British company holds 80 percent of the West Mediterranean Deepwater concession and RWE Dea the rest. BP is the operator at both projects.

RWE AG is Germany’s second-biggest utility by revenue and market capitalization after E.ON AG. BP is Europe’s second- largest oil company by market capitalization behind Royal Dutch Shell Plc.

(Source: Bloomberg)