Shell sells minority stake in offshore Mediterranean block to Kuwait’s Kufpec
Kufpec gets a slice of Shell’s Mediterranean block: Kuwait Foreign Petroleum Exploration Company (Kufpec) will acquire a 40% stake in Shell’s North East El Amriya concession area — also known as Block 3 – in the Mediterranean Sea, the companies said in a joint statement on Wednesday. The farm out agreement is pending approval from the government and regulators, the company said. It did not disclose the value of the stake.
No changes on the ground: Shell, via its BG International subsidiary, will remain the operator of the block. The company has owned and operated the concession since it acquired it in full from ExxonMobil last year.
SOUND SMART- A farm out agreement is when a company which owns the right to explore (or produce) oil or gas lets another party do the actual work. Company A might have the right to explore gas, but not the money or interest in doing so. Under a farm out agreement, Company A assigns its rights to Company B in exchange for an up-front payment, plus a royalty, cut of sales or percentage of earnings. Company B would also have to meet specific targets or spending requirements. Farm out agreements are common in the oil, gas and mining industries.
What they said: “We are glad to expand our presence in Egypt in cooperation with our international operating partners in highly prolific exploration basins… This new partnership in Block 3 empowers Kufpec to boost its offshore assets and exploration activities in Egypt,” company CEO Mohammad Salem Al Haimer said in the statement.
Kufpec is already active in the region: Kufpec holds a 40% working interest in the Geisum and Tawila West concession in the Gulf of Suez, where majority owner Cheiron made a new discovery last month. The Kuwaiti company also gained a 25% participating interest in the North Ras Kanayes offshore block in the Mediterranean in 2020.
Drilling has begun: Shell and its partners began drilling three new gas exploration wells at Amriya and the adjacent North Sidi Gaber concession last month, according to the Kufpec statement. Shell is spending more than USD 200 mn to pump another 200 mn cubic feet of gas per day from three new wells at its offshore West Delta Deep Marine (WDDM) development lease, it said in July.
(Source: Enterprise News MENA)