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| 11 February, 2018

Zohr reshapes future of gas exploration in Egypt 

Plan to launch an international bid for gas exploration in land and sea areas before the end of the first half of this year.

Image used for illustrative purpose.
The Mostord oil refinery in Cairo, May 6, 2008.

Image used for illustrative purpose. The Mostord oil refinery in Cairo, May 6, 2008.

REUTERS/Nasser Nuri

The Egyptian Natural Gas Holding Company (EGAS) plans to launch an international bid for gas exploration in land and sea areas before the end of the first half of this year.

According to Medhat Yousef, former vice president of the Egyptian General Petroleum Corporation (EGPC), the bids for exploration for oil and natural gas, which will be offered by Egypt during the coming period will see a turnout of international oil companies for participation, “after the discovery of Zohr, which encouraged companies to explore for Egyptian oil and gas,” he said.

“There has been a change in the search and exploration for Egyptian gas,” said Youssef, noting that in the past, international oil companies were applying for land exploration areas due to low exploration costs compared to marine areas.

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The EGAS has already prepared a plan that includes offering bids for natural gas and shale gas exploration annually, especially in the Mediterranean Sea, which the company regards as a promising area in the field of extracting natural gas for Egypt.

According to the United States Geological Survey (USGS), the reserves of the Mediterranean Basin are estimated at 122tn cubic feet of natural gas and about 107bn barrels of crude oil.

Italian energy company Eni announced in 2015 a discovery in the Shorouk Mediterranean Concession Area in the Mediterranean, covering about 100 sqkm of the concession area.

Zohr gas field has up to 30tn cubic feet of gasreserves, with about 22tn cubic feet of recoverable natural gas. The project’s investments reached about $12bn and could increase to $16bn over the entire lifetime of the project.

The EGAS is committed to offering more than 10 land and sea areas before the end of the first half of this year for exploration. The company has obtained security approvals for the tenders and will include eight maritime zones and three land areas.

The global bidding for gas and crude oil comes within the framework of the Ministry of Petroleum’s strategy to encourage and attract new investments from international companies to work in Egypt in this field with the final aim of adding new reserves and increasing hydrocarbon production and reserves to meet the needs of the local gas market.

In March 2015, the EGAS launched a tender for natural gas exploration in 12 maritime zones. Four offers were accepted in four areas in the Mediterranean with a minimum total investment of $306m. Offers were also accepted from BP and Eni in block 4 of North Ras El-Esh marine area, and the offer by the consortium of Eni, BP, and Total for block 7 in North El-Hammad offshore area.

An offer was also accepted from Italian company Edison in block 12 north-east of Haby, as well as an offer frpm BP for block 14 in North Tabia marine area.

Minister of Petroleum and Mineral Resources Tarek El Molla said that his ministry succeeded last year in adding about 1.6bn cubic feet of natural gas to domestic production to reach 5.5bn cubic feet per day, with the increase coming from the fields of Norus, Atoll, and North Alexandria, as well as Eni’s Zohr.

According to the minister, the domestic production of natural gas is directed entirely to consumption in the domestic market sectors of electricity and industry, and “with the achievement of gas self-sufficiency and the existence of excess gas, we will start to export abroad.”

Egypt’s natural gas production in 2018 is expected to reach 6.3bn cubic feet per day, compared to only 6bn cubic feet per day in the second half of 2017.

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