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BP and Egyptian Government in discussion to start North Alexandria

BP to invest $12 billion in West Nile Delta development

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolOn the last months, the UK-based major BP and the German utility company RWE intensified their discussions with the Egyptian Government through its Egyptian Natural Gas Holding (EGAS) national oi company (NOC) to revive the stalled West Nile Delta (WND) development and proceed with the deep water North Alexandria project offshore the west coast of Egypt.

The North Alexandria project is the master piece of the West Nile Delta development with more than 5 trillion cubic feet (tcf) of recoverable reserves of natural gas.

Beside North Alexandria, the West Mediterranean (WM) concession is the second largest block of the tWest Nile Delta development also idled while BP and RWE resolve their commercial terms and conditions with EGAS and Egyptian Authorities.

BP_West_Nile_Delta_Offshore_Fields_MapThe North Alexandria project requires $10 billion capital expenditure, while West Mediterranean should add $2 billion.

Together these projects tops the largest oil and gas investments ever in Egypt and should ensure this country of energy self-sufficiency and economical growth.

In October 2003, BP signed the first commercial agreement for North Alexandria with a production expected in 2007 at 375,000 cubic feet per day (cf/d) of gas.

In October 2006, the North Alexandria project was redefined through a new agreement to increase investment and gas production to 910,000 cf/d.

In 2008, EGAS and BP started to work again on a new contract to replace conventional production sharing agreement (PSA) by a remuneration fees system that came into conclusion in 2010.

In 2011, the revolution stopped all BP and RWE projects and opened a new context for the foreign companies operating in Egypt.

BP to double production from East and West Nile Delta

The new Authorities subsidized the local gas market to help restarting the economy but with the consequential effect to stop exploration and production investment.

As a result the production declined and the Egyptian Government diverted export volume to feed the local market and reduce daily shortage in gas supply.

BP_West_Nile_Delta_Offshore_FieldsIn 2014, Egypt nearly stopped gas exportation and negotiated liquefied natural gas (LNG) import from Algeria with the lease of a floating storage and regasification unit from Norway.

This import substitute can compensate a couple of days Egypt consumption but cannot be a sustainable policy as dramatically expensive.

To resolve this critical situation, BP, RWE, EGAS and the Egyptian Government worked hard together on the last quarter to investigate all solutions around the blocking point of the $4.10 per million BTU remuneration fee considered as far too low by the foreign companies.

In respect with the urgency of the situation, BP and RWE committed to invest $10 billion capital expenditure to develop North Alexandria on fast track with a first production of 450 million cf/d in 2017 and an expansion to 800 million cf/d by 2018.

All together through its concessions in East Nile Delta and West Nile Delta, BP is targeting to double its production in Egypt from 1 billion cf/d to 2 billion cf/d in the next five years.

For more information about oil and gas and petrochemical projects go to Project Smart Explorer

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