Shell has made a modest gas discovery with its latest well in the widely-watched North-East Mediterranean Deep Water (Nemed) block in Egypt.
Industry sources have suggested that the find could contain in the range of 300 billion cubic feet of gas, which would not be enough alone to take Nemed's gas reserve to more than the commercial threshold to justify a costly deep-water development project.
Shell has yet to inform its partners, state-owned oil and gas companies Egas and Egpc, of the result of the well.
"They either have not found a lot of gas or don't have the results yet," an Egyptian official said. "But it seems they have not been that successful this time either."
The supermajor has already found 1 trillion cubic feet of gas with two previous wells on Nemed and reserves could now be approaching 1.5 Tcf.
However, industry sources said Shell and partner, Malaysia's Petronas, really need to find at least 4 Tcf to be able to develop the field profitably and bring gas onshore for processing.
The Nemed campaign is being closely followed by other players in the Mediterranean Sea because its challenging environment will provide further clues to the prospectivity of the deep-water portions of the area.
Shell is now drilling the second of the three planned wells in its current campaign. Transocean's fifth-generation drillship Deepwater Expedition is drilling the probes.
The first two are in the south-west of the huge Nemed area while the third well will be drilled in the eastern side where water depths are a shallower 1500 to 1800 metres, compared with 2800 metres in the south-west.
The current programme is aimed at building on the success of an earlier round in 2004 when Shell drilled three wells, two of which resulted in gas discoveries.
The current wells are being drilled to depths of between 4000 and 4500 metres in waters 2400 to 2750 metres deep, setting new deep-water records off Egypt.
A number of significant gas discoveries have been made off Egypt in the last decade, encouraging countries such as Cyprus, Syria and Lebanon to prepare offshore licensing rounds.
India's Oil&Natural Gas Corporation is seeking to buy up to a 33% stake in Nemed as part of its expansion in the Middle East.
By Nassir Shirkhani
© Upstream 2007
