CAIRO Dec 17 Egypt has signed its first
contract to extract gas by fracking in a deal with Apache and
Shell Egypt that includes investments of $30-$40 million, the
oil ministry said on Wednesday, part of efforts to boost output
and ease a lingering energy crunch.
"The project will require horizontal drilling and hydraulic
fracturing, which is the same as the shale gas production method
used in the United States," the oil ministry statement said.
The ministry said in a statement that the deal to drill
three wells in the Abu al-Ghardeeq region of the Western Desert,
about 200 km west of Cairo, was Egypt's first contract for the
production of unconventional gas.
The head of Egypt's state oil company (EGPC) signed the deal
with a senior executive of Houston-based Apache Corporation
and the chairman of Shell Egypt, a subsidiary of
Anglo-Dutch oil major Royal Dutch Shell.
Shale gas extraction is more expensive than traditional
drilling and generally requires high energy prices to make it
economically feasible. Global oil prices are at 5-1/2-year lows,
with benchmark Brent crude futures under $60 a barrel.
A source at the petroleum ministry told Reuters that
unconventional gas extraction in the Western Desert will require
the operators to drill to depths of 14,000 feet.
The deal comes as Egypt is seeking new sources of energy to
cope with its worst energy crisis in decades, caused by
declining gas production and rising consumption.
Egypt reached an agreement with Norway's Hoegh LNG
in November for a long-delayed liquefied natural gas
(LNG) import terminal to be installed at the end of March, in
time to receive cargoes before power demand peaks in summer.
It is also seeking a second floating LNG import terminal to
boost its import capacity.
(Reporting By Shadi Bushra and Nadia El Gowely, editing by