ENI Finalises Deal with Egypt for Operations in Sinai, Nile Delta, Gulf of Suez, Mediterranean
While Igor Sechin was holding talks in Egypt, Italy’s ENI was finalising its multi-billion energy exploration deal with Cairo. The Egyptian oil ministry wrote on Monday that Egyptian General Petroleum Corp (EGPC) and the Italian major inked an agreement which includes concession areas in five different regions of the country.
‘The agreement includes the implementation of exploration and development activities at Belayim concession areas at Sinai, Abu Madi at Nile Delta, Ashrafi at Gulf of Suez, North Port Said in the Mediterranean and Baltim at offshore Nile Delta’ reads the note released by the Egyptian Ministry of Petroleum.
The agreement will translate into a $2 billion investment from Eni and its partners.
‘The deal stipulates providing unrecoverable signature bonuses totalling $10 million, in addition to recoverable signature bonuses years of about $505 million for a period of 5 years. The parties agreed to use both bonuses in reducing ENI’s dues to EGPC’ reads the note.
The parties decided to modify the gas price in some agreements, following in the footsteps of the Memorandum of Agreement signed last March in Sharm El-Sheikh.
The deal proves the intention of the current government to accelerate the energy cooperation promoted by the former Oil Minister Osama Kamal, who called on foreign companies to increase investments in the region in 2013. At the moment, BP, BG Group, Shell and ENI are the most active companies in the country led by Abdel Fattah el-Sisi.
Last week, ENI made a gas discovery off the coasts of Libya, while Shell confirmed its commitment to tap into shale gas resources in Egypt.
Earlier this month, BP increased its stake in the West Nile Delta (WND) project in Egypt, buying 17.75% of in the ongoing Phase 1 from DEA.
Despite many commentators are focusing on the resources in the East Mediterranean, majors are increasingly going back to North Africa, also as a result of the international endeavours to augment security in the region. In April, Cyprus, Egypt and Greece agreed to join forces to tackle terrorism in the Eastern Mediterranean and in the Middle East. A few days ago, Algeria’s Prime Minister Abdelmalek Sellal confirmed the country’s strategic partnership with Italy to trigger new energy ties and support regional security.
In 2014, BP Statistical Review estimated Egypt’s proved reserved at 65.2 trillion cubic feet, listing it at the third place in Africa after Nigeria (179.4 tcf) and Algeria (159.1 tcf). Egypt is indeed expected to have more gas than Libya (54.7 tcf).
It comes as little surprise that Russian companies are interested in increasing their clout in the region.
'In May 31, as part of his business trip, Rosneft Board Chairman Igor Sechin met Sherif Ismail, Egyptian Minister of Petroleum and Mineral Resources, and Tarek El Molla, Board Chairman of Egyptian General Petroleum Corporation (EGPC)' Rosneft wrote on Monday, adding that it is interested in expanding cooperation with Cairo.
Meanwhile, the main European companies are trying to revive the prospect of gas demand in Europe and more generally in the world, asking for a concerted cooperation to create a global framework to reduce carbon emissions.
‘Major oil and gas companies, BG Group plc, BP plc, Eni S.p.A., Royal Dutch Shell plc, Statoil ASA and Total SA, today announced their call to governments around the world and to the United Nations Framework Convention on Climate Change (UNFCCC) to introduce carbon pricing systems and create clear, stable, ambitious policy frameworks that could eventually connect national systems’ ENI wrote on Monday.
Sergio Matalucci
Sergio Matalucci is an Associate Partner at Natural Gas Europe. Follow him on Twitter: @SergioMatalucci