EGAS Awards Four Mediterranean Blocks in Mediterranean

The Egyptian Natural Gas Holding Company (EGAS) announced the results of its licensing round for gas-prone Mediterranean offshore acreage which is considered a sign of the growing interest in Egypt’s upstream potential.

EGAS has awarded four of the seven blocks to large international oil companies despite the bleak global economic outlook and earlier signs of lukewarm participation. This also drew the attention of that only limited number of them due to the economic climate of Egypt’s own gas-export-related political problems.

The awarded blocks went to IOCs already exist in the Egypt’s deepwater Nile Delta Basin.

Block-4 was given to the consortium of French Total and Italy’s Enel; it has two previously drilled wells, as well as extensive 2D and 3D seismic surveys. The block is located east El Burullus offshore, covering a 2, area and lying in water depths from about 100 meters to 1,600 meters, 70 km from the coast. The two companies have agreed to drill one further well and to do further seismic surveys during their exploration term.

BP was awarded Block-2, situated north Tineh offshore and about 60 km north of Port Said. The block covers around 2,400 sq. km, reaching water depths of about 1,000 meters. BP has committed to drilling three wells in its six year exploration period. The permit has four wells already been drilled.

Block-1 went to BG, north Gamasa Offshore covering an area of only about 281 sq. km and located much closer to the Egyptian shore than the other awarded blocks. BG did not mention how many wells it will drill, but the block has two wells already been drilled, which showed some significant discoveries, and considerable quantities of 2D and 3D seismic data exist.

The hotly contested license Block-3 went to the alliance of Shell and BP, together with Malaysia’s Petronas. Block-3 is located north Damietta offshore, covering an area of 1,600 sq. km and having significant amounts of previous 2D and 3D surveys carried out, as well as three wells drilled. The companies themselves said they have equal stakes in the license and have committed to drilling four wells within six years on the block.

Shamil Hamdy, first undersecretary at the Ministry of Petroleum, previously told reporters on the sidelines of the Intergas V conference in Cairo “In the deep water you need big players, so we were happy to see them ‘acquire acreage’. They have the technology and the ability to invest.”

The challenge for Egypt has been to make sure that IOCs again feel confident in the long term direction of Egypt’s energy policy, so that the large gas reserves discovered in the past decade can be successfully developed. Egypt will have to demonstrate stability in its local demand and reserves in order to maintain the flow of the upstream investment into the country.

Encouraged by the results of the EGAS bid round, the state-owned Egyptian General Petroleum Corporation (EGPC) is looking forward to its latest upstream tender.

EGPC’s Vice Executive Chairman for Agreements and Exploration, Mustafa El Bahr, said that around 15-20 onshore and offshore blocks would be offered, in both the Eastern and Western Desert, and in the Gulf of Suez. He added that the blocks to be awarded this year.

“We’ve been working hard to prepare the bid round; we’re targeting the first week of June,” said El Bahr.


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