Daily News Egypt

Negotiations with Eni to execute $5bn project in next 3 years: Petroleum Minister - Daily News Egypt

Advertising Area




Advertising Area




Negotiations with Eni to execute $5bn project in next 3 years: Petroleum Minister

695,000 barrels of oil production, 4.7bn feet of gas daily for FY 2015/2016


Petroleum Minister Sherif Ismail (DNE Photo)
Petroleum Minister Sherif Ismail
(DNE Photo)

As part of the government’s plan to boost investments in different sectors and to solve issues facing the government, Daily News Egypt spoke with Minister of Petroleum Sherif Ismail.

What are the biggest oil projects being negotiated now?

Negotiations with Eni regarding the $5bn project are in place and spending will be through three years starting from this year. This project is for the exploration of oil and gas in the Mediterranean. The Economic Summit will witness the signing of the agreement with Italian company Eni, but I cannot disclose any information now. Recently, we signed an agreement with British Petroleum (BP) with investments at $12bn, to develop a project north of Alexandria, which will produce 1.2bn sqm daily, equal to 25% of the current gas production in Egypt. North Alexandria’s reserve is at 5tr sqm of gas and 55m barrels of condensers.

What are the estimated investments to be pumped by foreign investors for the fiscal year (FY) 2015/2016?

We target investments worth more than $8m during the coming FY from foreign companies working in the oil and natural gas exploration and excavation sector.

What are the targeted production rates of oil and natural gas during FY 2015/2016?

We plan to produce around 695,000 barrels of crude oil daily and 4.7bn cubic feet of gas during FY 2015/2016. This is compared to the current 4.5bn cubic feet now.

Will there be more tenders for excavation and exploration of oil and natural gas during the next phase?

We aim to offer more tenders in new sites as well as areas where shale gas is, in the Western Desert by the end of this year. There are also two tenders from Ganoub El-Wadi Petroleum Holding Company (Ganope) and EGAS in several areas.

Are there any negotiations with companies regarding re-pricing?

We are currently negotiating with British Gas (BG) regarding re-pricing gas for the 9B phase project.

BG’s project in Alexandria, in Rashid and Lake Borollos, account for roughly 76 gas producing wells, of which 47 wells are already operating. Re-pricing gas is already completed for new projects with a number of foreign partners, including RWI, BP, Shell, Apache Corporation and Edison International. There will be new projects in partnership with Eni and the produced gas price will be re-set during the coming period. Egypt pays $2.65 for foreign partners for each British million thermal units in all of its agreements, except for some areas in the deep Mediterranean. There is a different point of view regarding the gas pricing with foreign partners and it is that pricing has to be suitable to gain revenue that would be in line with risks and investments in the sector. Negotiations for pricing of gas will continue to take place so that companies would rush implementation of the development plan in their concession areas.

How much are the Ministry of Petroleum’s dues from the Ministry of Electricity?

Our dues from the Ministry of Electricity are at EGP 85bn in exchange for gas, heating oil and diesel to operate the new stations. We are negotiating also with a bank to get a loan at EGP 10bn. The fund aims to pay the Egyptian Electricity Holding Company’s debts to the Egyptian General Petroleum Corporation (EGPC).

Will there be any loans for petroleum in the coming period?

The Economic Summit will witness signing a loan worth $200m with a bank to repay a part of the debt of the foreign partner or the petroleum products suppliers.

What are the latest updates regarding importing gas from Cyprus?

I will sign an agreement between Cypriot company CH and EGAS during the Economic Summit to start technical and economic studies for the establishment of a marine pipeline to import gas from Cyprus. I will also be signing a Memorandum of Understanding with the Cypriot side for the development of some of the discoveries in the Cypriot gas from Aphrodite field through a maritime line extending from those explorations to Egypt. CH and EGAS will continue with the studies.

The American company, Noble Energy, is considering compound facilities to produce gas from Aphrodite gas field and then pump it into a 400 km long pipeline till it reaches Egypt. During this month, a delegation from Noble Energy visited Egypt to negotiate with the holding company EGAS on supplying Egypt with gas. The Noble Energy plan for the development of the Aphrodite gas field in the coming years was discussed in order to determine the quantities that Egypt will get to supply its power plants and to provide energy to the industrial sector in the case it enters the Cypriot gas deal.

How many petroleum projects will be raised during the Economic Summit and how about their values?

The Ministry of Petroleum will present 12 projects in the fields of refining, petrochemicals, mineral resources and raw transmission lines, with a total of $ 9.3 bn.

When will the second regasification boat arrive to Egypt?

The boat will arrive to Egypt by the beginning of July. However, we did not determine yet whether we will launch a tender to rent the boat or we will deal through direct negotiations. We will import about extra 500m cubic feet of gas per day extra during the coming period to provide the needs of the industrial sector and power plants.

Chairman of EGAS signed with Svaenning Stola, chairman of the Norwegian company Hoege, the final contract of the first floating vessel for the reception and storage of liquefied natural gas shipments and return it to its gaseous state again then pump it into the natural gas national network which will reach Ain Sokhna Port this March. Last October, EGAS launched a tender to import liquefied natural gas. Four companies won the tender among which are: the British BP, the multinational Vitol, as well as Trafigura and Noble Clean Fuels, and that was in order to provide Egypt with 40 shipments of liquefied natural gas per year starting from next April.

It was agreed with the Russian company Gazprom to supply about 35 shipments of liquefied gas over the next five years in addition to the six shipments of the Algerian Sonatrach during 2015. Gazprom will provide Egypt with about seven shipments of liquefied natural gas annually starting from this year until 2020. Egypt is experiencing a gap between the production and the demand for gas during the period from 2016 to 2020. During this period of time we will fill the gap through imports.

How much does the support of the next fiscal year bill worth?

The fuel support for the next FY 2015-2016 will be about EGP 85bn based on the average price of $75 for Brent.

What’s the value of the foreign partner share in the oil and gas in the light of the Brent low price?

During January and February, the partner’s share in the oil and gas obtained by Egypt is worth about $700m a month, according to Brent prices during that period. In 2013-2014, $10.7bn was paid of the dues of the foreign partners where the value of the partner’s share in oil and gas, which we obtained during the year, reached about $11.2bn. Repaying the dues on a regular basis confirms the commitment of the Ministry of Petroleum towards foreign partners in the sector, in addition to the fact that the payment is done in several forms including oil shipments, settlements or even cash.

What is the real reason behind the energy issues in Egypt?

The reason for the energy issue in Egypt is the deficit in funding the country’s demands of diesel, not a gap between production and consumption. The proof is Japan, as the country does not produce energy but it does not have an issue because of the availability of the financial resources. Egypt is able to produce 7bn cubic feet of gas daily, compared to the current 4.7bn. The country still has oil and natural gas yet to be discovered, like in the Western Desert, West of the Delta, and the deep Mediterranean, which has a huge natural gas reserve.

https://cdn1.dailynewsegypt.com/2015/03/13/negotiations-with-eni-to-execute-5bn-project-in-next-3-years-petroleum-minister/
Breaking News

No current breaking news

Receive our daily newsletter
Subscribe