In the Nile and the Western Desert, Egypt’s upstream development continues, despite systemic problems
As with Egypt’s social and political upheaval, so goes its oil and gas industry. There has been rapid progress in exploration, with discoveries in Nile Delta and Western Desert.
But there have also been signs of trouble, from spiraling state oil and gas debts and export worries to political uncertainty while the country’s new President Mohamed Morsi Isa al-Ayyat remains hampered in his efforts to form a government. Like Tunisia, the country’s priority is to shore up energy for domestic use, which the government has heavily subsidised.
On the gas
It’s in gas where Egypt is likely to see most upstream activity. The country now has the 16th-largest proved natural-gas reserves in the world, after a decade of large discoveries. However, the government has not paid private oil companies for their production for some time. A May report in the National estimates Egypt owes producers $4 billion in gas receivables alone.
The issue has weighed on Dana Gas, the Sharjah-based firm, which owns three concessions onshore. Shell handed back the Northeast Mediterranean Deepwater concession recently over concerns that low prices and high costs means deepwater doesn’t stack up.
With both oil and gas, Egypt’s major challenge is to balance the country’s need for cheap energy, while finding the money to repay oil and gas companies and encourage more investment. Yet Egypt’s natural gas industry continues to grow, after two commitments to further investment.
BP Bullish
In October, BP announced a new discovery in the North El Burg Offshore Concession in the Nile Delta.
BP has stakes in eleven blocks in the Delta, six of which it operates. The company has previously sold $5 billion Egyptian assets to Apache, including Nile Delta blocks and assets in the western desert, to foot the $40 billion bill from the Gulf of Mexico spill in 2010.
The British supermajor has also begun full commercial production in the $334 million Seth field in the East Nile Delta. The project includes six production wells, and initially produced gas at the end of June, three months ahead of schedule.
The first two wells accessing the western part of the Seth reservoir are expected to reach 170 million standard cubic feet per day and develop about 240 billion cubic feet (bcf) of gas.
BP and its partners produce more than 35% of the country’s domestic gas and have produced almost 40% of Egypt’s entire oil production.
BG Group
In July, Egypt’s oil ministry confirmed a major new gas discovery offshore at the block 8b concession in the West Delta of the Nile operated by Britain’s BG Group.
The discovery at Harmatan Deep-1 is expected to flow at 39 million cubic feet a day, with 1,039 of associated condensate. Reserves have been put at 123 billion cubic feet of gas and 6.1 million barrels of condensate, according to a statement on the Egyptian oil ministry’s website posted on Friday.
Harmatan Deep-1 is located about 5.2 kilometers north-east of Ras Al-Barr, in water depth of 11m. T
ENI
In oil, Eni announced in May that it has yielded test flows of around 3,500 barrels of oil per day and 1 million cubic feet per day of associated natural gas from the Emry Deep 1X well, located about 180 miles southwest of Alexandria in the Western Desert.
Eni said operations at the site are part of a strategy to refocus its efforts in Egypt on deeper plays in the Western Desert. The well was drilled to a depth of 11,900 feet.
Apache
Apache, the largest lease holder in Egypt’s Western Desert with 9.7 million acres, continues to expand further into the Western Desert and achieved a record for annual production in 2011. Compared to the prior year, gross daily production was up 12 percent, and net daily production was up 2 percent.
In June last year Apache Apache Corporation today reported five new oil discoveries in its Faghur Basin play in the far southwest of Egypt’s Western Desert oil and gas province. Eight additional exploration wells are planned for the area this year, with $1.5bn of investment.
Kuwait Energy
Kuwait Energy is continuing its progress in Egypt, racking up an average production of 12,637 boe a day in Q1 2012. The company has interests in three active fields, Area A, ERQ, Burg El Arab, and continues to build tanks and other supporting infrastructure to consolidate its discoveries.
Egypt in Brief: BP Statistical Review 2012
– NOC: Egyptian General Petroleum Corporation (EGPC)
– Oil Reserves: 4.3 billlion barrels
– Oil Production/Consumption: 735,000 bpd/705,000 bpd
– Gas Reserves: 77.3 trillion cu/ft a year
– Gas Production/Consumption: 2.1 bn cu/ft/1.7 bin cu/ft
