In our headline news this week, Eni has said that talks with JV Union Fenosa partner Naturgy regarding the re-opening of the Damietta LNG facility are at “an advanced stage”. It is believed that the facility will begin operations in 2019 should the two companies reach an agreement. The Egyptian government agreed last month to pay a $2 billion settlement to the JV after it halted gas supplies to the facility in 2012, paving the way for Union Fenosa to begin re-exporting gas.
In company news, TransGlobe Energy announced this week that the company had begun drilling the second exploratory oil well in its South Ghazalat concession, located in the Western Desert. The well is located in the eastern part of the concession, offsetting the Raml oil field in the Abu Gharadig basin.
Blue Water Energy (BWE) this week announced that it will be investing in independent E&P company Apex Energy. BWE will join Warburg Pincus and the International Finance Corporation in jointly-financing Apex’s investment program, which includes drilling, asset acquisitions and corporate transactions. BWE did not reveal how much it will invest in the company.
This week, Minister of Petroleum Tarek El Molla announced that the ministry would launch the first E&P bid round for the Red Sea before the end of 2018. The ministry is waiting until seismic reflection data has been processed before accepting bids.
In related news, future production and sharing agreements with the government may be about to become more attractive for IOCs. El Molla this week confirmed previous reports that the ministry is working on a new contract model that will see IOCs cover E&P costs in return for share of the production. Officials said earlier this month that IOCs will be able to sell their production share at their discretion.
New government figures were revealed this week by El Molla, who told the press that the government is currently spending $1.5 billion each month on securing petroleum products for the local market. Thanks to the rise in global oil prices, the country is now spending between $700 million and $800 million buying foreign companies’ shares in JV oil production.
El Molla also revealed new gas figures this week on the sidelines of a symposium of the Canadian-Egyptian Business Council. The minister announced that Egypt’s natural gas reserves have increased by a third (33.3%) since 2015, rising from 60 trillion cubic feet (Tcf) to 90 Tcf. The sharp increase is thanks to the Zohr and Atoll discoveries.
And finally, Egypt’s refining capacity looks set to rise over the coming years. According to an EGPC source, the state-owned company is planning to increase annual national refining capacity past 42 million tons from 2019. More than $8 billion will be invested into expanding refineries such as MIDOR in an effort to lessen the country’s dependence on imports of petroleum products.