Shell eyes Egypt LNG feast

Anglo-Dutch supermajor Shell wants to become an exporter of liquefied natural gas from Egypt using gas from offshore discoveries, the chairman of the company’s Egypt unit said.

Egypt already exports LNG from terminals at Damietta and Idku on its north Mediterranean coast, but said last year it would not sign any new gas export contracts until 2010 in order to meet rising local demand.

“In our deep-water concession Nemed (North East Mediterranean) we have some discovered resources that we are looking at developing,” Ahmad Atallah, chairman of Shell Egypt, told Reuters in an inteview.

“We are a big LNG player in the global market, it has been our aspiration to establish an LNG position in Egypt,” he said.

Shell is considering, among other options, a floating liquefaction terminal for production of its LNG in Egypt, but Atallah said it was too soon to limit the company to one plan.

“We have several options that we are looking at and then we will see which option to take but it is premature to see which one,” he said.

Shell produces 100,000 barrels per day of oil equivalent, all from its onshore concessions in the Western Desert. About 75% of the production is gas and 25% is oil.

The company sells all its oil and gas output from Egypt to two state-owned companies, the Egyptian Natural Gas Holding Company and the Egyptian General Petroleum Corporation.

The price ceiling agreed with the government for Shell’s onshore gas production is $2.65 per million British thermal unit, Atallah said.

“We’ve had existing contracts with the gas price ceiling for quite some time,” he told the news agency.

“These agreements have been profitable for us,” he said, adding that Shell might seek to review them in future.

The government has said it would raise the price it pays for gas to foreign companies in a bid to attract more investments in challenging deep-water areas.

Shell plans to launch an exploration campaign in its offshore North West Damietta concession by the fourth quarter of this year.

“We are planning to drill two wells back-to-back in North West Damietta,” Atallah said.

“These are high pressure and high temperature, probably over 6000 metres in depth so the duration, from our experience with other deep wells, is probably six to nine months of drilling per well,” Atallah said.

Shell holds a 61% stake in the concession, while E.ON Ruhrgas has 29% and GDF Suez 10%.

Shell recently had success in bringing more production onstream from its Badr El Din concession in the Western Desert.

“In April, we had a new production from Bed 19 gas and condensate field, which is located in Badr El Din concession area,” Atallah said. “We built a 75-kilometre gas pipeline to link this field with the gas facilities in Bed 3.”

In the last three years Shell has drilled 19 exploration wells and made 15 discoveries in the Western Desert.

(Upstream Online)


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