Edison’s CEO Umberto Quadrino and the Egyptian Petroleum Minister Eng. Sameh Fahmy signed a $1.4-billion concession agreement for the offshore fields of Abu Qir, which would grant exploration, production and development rights to Edison.
The concession agreement follows the signature of the binding agreement on 2 December 2008 between Edison and the Egyptian General Petroleum Corporation (EGPC) and approved by the Egyptian Parliament. The concession has 20 year duration and can be extended for further 10 years.
“We are very pleased for the agreement we signed today, it is an important and fundamental step ahead in the strategy of Edison. Egypt is one of the main areas of interest and we plan to double the output of Abu Qir,” said Quadrino to Egypt Oil & Gas.
The Abu Qir concession agreement enables Edison to significantly increase its hydrocarbons reserves by adding 27 billion cubic meters of gas equivalent of reserves (proven and probable) to the current 33 billion, and will enable Edison to increase by 2013 its annual gas production to 2.6 billion cubic meters from the current 1.1 billion cubic meters.
“It is a historic agreement by all means and proves that the Egyptian petroleum field is still attracting investments despite the current pricing fall and economic crisis. This deal will further cement the ties between Egypt-Italy,” commented Eng. Fahmy on the agreement.
Edison will operate the Abu Qir concession jointly with EGPC through a new operating company.
“There is a big say around the world that all sectors are going back in development. However, today’s deal is one big example that we are ahead not backwards,” said Ebrahim El-Essawy, Executive Manager of Edison in Egypt.
The fields that make up the Abu Qir concession have been operating since the 1970s and 1980s and currently produce approximately 1.5 billion cubic meters of gas per year and 1.5 million barrels of oil through three platforms. The concession has reserves estimated at approximately 70 billion cubic meters of gas equivalent, of which about 40 percent is Edison’s entitlement. EGPC and Edison plan to increase production from existing reserves and exploit the concession’s high exploration potential. The transaction represents a significant investment by Edison in the Egyptian oil and gas sector.