Kyiv Post: Naftogaz's Oil and Gas Business in Egypt More Revenue Stream than Energy Source

Ukraine’s state energy company Naftogaz is finally reaping the rewards of his overseas prospecting ventures, as the company announced that it can now start extraction of oil and natural gas in Egypt.

In September-October alone, Naftogaz reported that it had extracted 19 million cubic meters of natural gas, or about 300,000 cubic meters per day. The pipelines have been laid and the infrastructure will be completed in 2015.

Once the infrastructure is fully operational, the company projects daily natural gas extraction of 700,000 cubic meters per day, which would come to over 255 million per year. Taking into consideration the first quarter 2015 price for gas agreed with Russia’s Gazprom on Oct. 30 of $365 per thousand cubic meters, the relative value for Ukraine of one year’s worth of Egyptian gas comes to around $93 million.

In addition, Naftogaz expects to produce 260,000 tons of oil this year in Egypt, or 11-12 percent of the annual oil production in Ukraine. Once all the gear is in place, the expectations is that extraction will rise form 740 tonnes of oil per day to 950, according to Naftogaz.

The project, located in the El Alam Shawish East field in the Western Desert of Egypt, was initiated in 2006 with a concession agreement between Naftogaz and the Egyptian government and the Egyptian General Petroleum Corporation. After drilling 16 prospecting, 12 exploratory and 12 production wells, the first output of the 80 tonnes of oil per day, or 588 barrels, began to flow in 2009. Until this past September, total production has been 680,000 tonnes of oil. MORE