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El Molla dismisses talk of Egypt bid round in 2017

Posted: January 28, 2017 at 12:51 pm   /   by   /   comments (0)

mollaSome surprise at delay given popularity following giant Zohr discovery.

Egypt Oil Minister Tarek El Molla said this week that state-owned Egyptian Natural Gas Holding Company (EGAS) will not launch a fresh licensing round in the Mediterranean Sea until next year at the earliest.

“I’ve told them no, not until we deal with and finalise the awards from the previous round last year,” El Molla told Upstream, adding that the round could be held “maybe next year”.

Engineering companies and sources said recently that the planned offshore round would likely be launched in March.

The delay is a surprise to some, given keen interest on the part of international companies to invest off Egypt following the discovery of the giant Zohr field by Italy’s Eni two years ago.

Its attractiveness is also more appealing given the willingness of the government to offer international players attractive gas prices for offshore finds.

The area in the proposed EGAS round is expected to include an 80,000 square kilometres frontier zone.

About 7380 kilometres of 2D seismic data acquired by Petroleum Geo-Services (PGS) will underpin the offering, along with about 10,000 kilometres of re-processed legacy 2D seismic.

PGS was last year aiming to have all data ready by February, with block demarcation starting soon thereafter.

An Oil Ministry official separately told Upstream that efforts are under way to make Egypt more attractive to international players, and a new reformed contract model should be ready next year.

“No one objects to the existing PSA agreement, but they’re not happy with the administrative process between launch and contract signing,” the official said.

El Molla also confirmed to Upstream that first gas from the Zohr field will flow in late 2017.

The Eni-led consortium developing the giant field will start pumping gas in December at a rate of 200 million cubic feet per day, with the volume being “ramped up by 200 MMcfd every three weeks or so” until the target of 1.2 billion cubic feet per day is reached in March 2018, he said.

“We’re now in the planning stage for the second phase”, raising production to 2 Bcfd by the end of 2018, El Molla said.

El Molla also told Upstream the amount of debt still owed to international players for past work was now $3.5 billion — down by $2.5 billion on the amount estimated in mid-2016. Separately, he suggested to a gathering at Chatham House in London on Tuesday that World Bank funds, rather than IMF money, might be used to reduce these debts.

Egypt was able to reduce debt to international players after receiving billions of dollars worth of grants and oil shipments from Persian Gulf states such as the United Arabic Emirates and Saudi Arabia.

However, Saudi-Egyptian diplomatic ties have recently deteriorated, leading Egypt to turn to the IMF and the World Bank to help it ease persistent financial woes arising from the 2011 revolution.

El Molla said Cairo has been buying Iraqi crude from traders and is talks with Baghdad for a state-to-state deal on direct supplies of Basra light crude.

(Source: Upstream Online)

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