Multinational oil and gas giant, British Petroleum (BP) has struck a deal with Egypt to invest $10 billion in gas fields exploration, which are estimated to hold five trillion cubic feet (tcf) of gas reserves.
Prime Minister Ibrahim Mahlab announced the finalisation of the investment deal that will see work begin in gas fields capable of producing 20 per cent of Egypt’s total daily gas output.
The $10 billion capital will be invested over the next four to five years, reports say.
Gas production is increasing
BP says that it will restart a gas project in north Alexandria, halted since 2011 due to instability, and is scheduled to start production in 2017.
The fields, which were discovered by BP, can produce 1.2 million cubic feet per day (mcfd), equivalent to 20 percent of Egypt’s current daily gas production.
The gas deal, which has been in the pipeline, is needed to tackle Egypt’s energy difficulties as the country needs natural gas for power generation to cover for the nationwide shortages and reverse the deterioration in local production of gas.
BP currently produces almost 15 per cent of Egypt’s entire oil output and close to 30 per cent of Egypt’s gas production with its partners.
In previous statements, Egypt’s oil minister Sherif Ismail pointed out that BP’s north Alexandria concession would produce 450 million cubic feet per day (mcfd) in initial production. The output would almost double to 800 mcfd by 2018.
Ismail adds that Egypt would pay $1.5 billion of the money it owed to foreign oil companies by the end of 2014. The total amount of oil debts has increased to $6 billion in May, according to Khaled Abdel-Badie, president of the Egyptian Natural Gas Holding Company (EGAS).
Earlier in May, BP said that it planned to invest $1.5 billion in Egypt during the second half of 2014 in order to increase its production.
Egypt has suffered an energy crisis in the past three years, resulting in frequent electricity blackouts. Several government officials have attributed the power cuts to a growing fuel subsidies bill and declining gas production.
The prime minister also explained that BP has also been working to invest in Egypt’s Nile Delta, Suez Canal and the Mediterranean.
According to reports, Egypt’s consumption of natural gas is projected to increase 12.5 per cent to 5.57 billion cubic feet per day in 2014/15 fiscal year.