Bloomberg News

Egypt Awards Energy Licenses to Accelerate Exploration Pace

April 16, 2013

Egyptian Natural Gas Holding Co. awarded eight gas-exploration licenses and will open bidding for at least 10 more this year as the North African country seeks to increase its fossil-fuel reserves.

Egas, as the state-run company is known, will hold a bidding round for at least 10 blocks in the Nile Delta and the Mediterranean Sea in August, Chairman Sherif Soussa said yesterday. Seven blocks on offer in the most recent round, which closed in February, weren’t awarded because of insufficient data, he said in an interview in his office in Cairo.

Egypt, the Arab world’s most populous nation, is stepping up the pace of energy exploration and production, which slowed amid civil unrest during the two years since the uprising that toppled president Hosni Mubarak. To meet peak demand for energy for industry, private companies have been allowed to import gas and resell it to other non-state companies or factories.

“The private sector will deal with the purchase and the sale of gas amongst themselves,” he said. “The government will just act as a regulator to prevent monopoly of prices.”

Separately, five companies have submitted offers to sell natural gas to Egas for use in power generation before the onset of peak summer months of June and July, Soussa said. Egas plans to complete the review of the technical bids today and will announce results of the import tender by the end of next week.

Auction Winners

BP Plc (BP/) and Petroceltic International Plc of the U.K., Italy’s Edison SpA, Dana Gas of the United Arab Emirates, Canada’s Sea Dragon Energy Inc., International Egyptian Oil Co. and Pura Vida Energy NL of Australia won blocks in the auction held by Egas, the Oil Ministry said today. The companies will drill 18 wells, with overall minimum investment estimated at $1.2 billion.

Under the new regulations of this auction, foreign partners will have the option of selling their share of the gas produced, with the approval of Egas, Soussa said. Previously they were required to sell their whole share to Egypt, except gas that was liquified and exported at Edku.

Egypt’s daily gas production has declined this year to 5.75 billion cubic feet this year from an average of 6 billion cubic feet in the past two years, Egyptian General Petroleum Corp. Vice President Ayman Sakr said in an interview in Cairo.

To contact the reporter on this story: Ola Galal in Cairo at ogalal@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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