Egypt: Securing energy supplies
A range of gas exploration tenders should bring Egypt billions of dollars in investment this year and help the country meet its pressing long-term energy needs.
On April 16, Egyptian Natural Gas Holding Company (Egas) awarded eight licences for gas exploration and said it would potentially be offering at least 10 more this year. The winning bidders were the UK’s BP and Petroceltic, UAE-based Dana Gas, Italy’s Edison, Sea Dragon Energy of Canada, Australia’s Pura Vida Energy and the International Egyptian Oil Company. Combined, the licensees are expected to drill a minimum of 18 wells and make investments amounting to at least $1.2bn. Osama Kamal, former head of the Ministry of Petroleum, has said in the past that investments in gas and oil exploration are projected to total $8.6bn this year.
The winning bidders will be allowed to sell their share of the gas produced; previously, the Egyptian state was the sole buyer, with the exception of output that was exported as liquefied natural gas (LNG) from Edku on the Mediterranean Sea. These more accommodating terms were prompted in part by the initially limited interest in the most recent round, which had to be pushed back from November 2012 to February 2013.
Investments in gas exploration over the past 20 years have paid dividends, and proven reserves totalled 2.2tn cubic metres (tcm), or 77.3trn cubic feet (tcf) at the end of 2011, according to BP’s July 2012 Statistical Energy Review, up from 0.4 tcm in 1991 and 1.6 tcm in 2001. Production reached 61.3bn cubic metres (bcm), up from just 25.2 bcm a decade earlier. BP estimates that at current output levels, proven reserves will last just under 37 years. Production continued to outstrip consumption in 2011, at 44.7 bcm.
But exploration has slowed since the Egyptian Revolution of early 2011, due to the uncertain business environment that followed. Gas output has declined this year to a daily average of 5.75bn cubic feet (bcf) from 6 bcf last year, according to Ayman Sakr, vice-president of the state-owned Egyptian General Petroleum Corporation.