The Egyptian General Petroleum Corporation (EGPC) has concluded a deal with British Petroleum (BP) by virtue of which BP will maintain full rights to production in the North Alexandria field during the exploration and drilling period that will continue for the next 20 years.
The new model of agreement, known as the "post-production investment model", is perhaps the first of its kind to be concluded by EGPC with a foreign partner.
Under its terms, EGPC is guaranteed first purchasing rights at a price linked to the price of brunt oil. Accordingly, the price of gas purchased by EGPC will range between a maximum of $4.1 per million British thermal unit (Btu) if oil reaches $120 per barrel and a minimum of $3 per million Btu if oil reaches $50 per barrel.
The new deal will void a 2002 agreement between the sides that set a fixed price for purchasing gas at $2.65 per million Btu. It will also end the traditional model for production sharing with foreign partners.
In the meantime, Petroject has been awarded a LE220 million project to extend nine gas pipelines at a length of 150km in the United Arab Emirates.
© Al Ahram Weekly 2010
