November 15, 2011 / 5:01 PM / in 8 years

Egypt gas bid round to include area abandoned by Shell

DOHA, Nov 15 (Reuters) - Areas that Egypt plans to offer for natural gas exploration will include one off the Nile delta that Royal Dutch Shell abandoned early this year because the company could not make it work commercially, Egypt’s oil minister said on Tuesday.

The minister, Abdullah Ghorab, had said earlier that the state-owned gas company Egas planned to hold a bidding round for gas exploration early next year.

The round will be the first since Egyptian President Hosni Mubarak was toppled on Feb. 11 in a popular uprising.

“Egas will have a bid round soon and the NEMED area will be part of it,” Ghorab told reporters in Doha.

“This was the area in which Shell spent a billion dollars and found one trillion, but then left it as it couldn’t develop it due to the circumstances of the agreement.”

Shell said it relinquished the NEMED concession in early 2011 after spending 10 years trying to prove the presence of gas that could be commercially exploited.

“The North East Mediterranean Deepwater block was relinquished to the Egyptian General Petroleum Corporation after a very dedicated and focused exploration campaign,” a Shell spokesman said.

“Although Shell made two gas discoveries, we have decided not to pursue these further due to the challenging economics of the project,” the spokesman said. “The area will be open for the next offshore bid round.”

Ghorab also said talks were continuing with Israel over the price it pays for Egyptian natural gas, and that Egypt expected Israel to agree to a price increase.

Egypt’s 20-year gas deal with Israel, signed in the Mubarak era, is unpopular with the Egyptian public. Critics argue that Israel has not been paying enough.

“We will adjust prices. No agreement will continue if it is not balanced,” he said, adding that he would make an announcement only when the issues were finalised.

Egypt currently produces about 700,000 barrels per day (bpd)of oil and condensates and 6 billion cubic metres of gas, Ghorab said on Monday.

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