BP (ticker: BP) has released a statement saying that the company plans to expand its operations in Egypt with a $240 million investment in the country.
Last year, the Egyptian Natural Gas Holding Company (EGAS) auctioned off several blocks in Egypt, both on and offshore. BP was awarded Block 8, an offshore location in the Mediterranean Sea, and Block 3, an onshore site in the Nile Delta. The company has committed to invest a total of $240 million in the blocks over different phases, with 3D seismic and exploration wells at each site expected to take anywhere from six to eight years.
Block 8 is in the northeastern part of Egypt’s economic waters. The block lies at approximately 220km (137 miles) to the northeast and 170km (106 miles) to the northwest of Alexandria and Port Said cities respectively. BP will have 50% equity and the block will be operated by Spain’s ENI (ticker: ENI) which holds the remaining 50%.
Block 3 is located in the northeastern part of the Nile Delta cone, approximately 57km (34 miles) to the west of Port Said. BP will operate the block with 50% equity and Dana Gas of Abu Dhabi will hold the remaining 50% working interest.
BP’s partner in Block 3, Dana Gas, also has existing development leases in adjacent blocks, according to the company, allowing for potential leveraging of the existing infrastructure in case of potential discoveries. Dana Gas already has a strong presence in the region, with an average production of 40,500 BOEPD in Egypt, according to the company’s Q3’14 report.
Egypt is trying to attract more international business
The announcement of BP’s plans to invest in Egypt comes as good news to the country as it wrestles with an energy crisis. Most international energy firms entered Egypt to develop energy for export, but as consumption has increased and production decreased, the government has diverted energy supplies to the domestic market, hurting companies’ profits, reports Reuters.
Last month, Egypt’s oil ministry said that the country plans to repay all of its $4.9 billion debt to foreign oil and gas companies within six months. Egypt hopes the move will encourage more international companies to begin exploring and ease the country’s energy crunch.
As part of the company’s press release, Hesham Mekawi, BP North Africa Regional President, said, “We look forward to continuing to play a key role in the development of Egypt’s energy sector … Exploring the two blocks will require substantial investments to unlock their potential, and will be done as part of our commitment to meeting Egypt’s energy needs.” As Egypt continues to handle economic instability that started with the popular uprising that ousted former President Hosni Mubarak, BP’s announcement to increase investments in the country comes as good news to Egypt’s government as they try to attract more international energy firms.
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