February 11, 2019 / 6:25 PM / in a month

Egypt to see gas boost from BP fields, Zohr as Cairo returns to export market

CAIRO (Reuters) - Egypt’s gas output will get a boost this year as the country’s huge Zohr field nears peak production and with $1.8 billion in investment from BP, officials said on Monday, as Egypt returns to export markets and positions itself as a regional hub.

FILE PHOTO: Tarek El Molla, Egypt's Minister of Petroleum and Mineral Resources, speaks during an interview with Reuters at his office in Cairo, Egypt, October 29, 2015. REUTERS/Amr Abdallah Dalsh

Egypt hopes to leverage its strategic location and well-developed infrastructure to become a key international trading and distribution center for gas, a potentially remarkable turnaround for a country that spent about $3 billion on annual liquefied natural gas (LNG) imports as recently as 2016.

It has made a series of big discoveries in recent years, including Zohr, the largest gas field in the Mediterranean, helping to draw back investors that had pulled away after a 2011 uprising led to mounting debt payments.

“What we have achieved in only three years has started to attract the attention of everybody — everybody in oil and gas industry, financial organizations ... everyone is looking to Egypt with interest,” Petroleum Minister Tarek El Molla told an energy forum in Cairo.

Egypt is now hoping to tap long underutilized liquefaction plants, where gas is turned into LNG, to export supplies across the Mediterranean along with that of its neighbors, like Israel, which said it would pipe gas to Egypt later this year.

Egypt imported its final natural gas shipment last September, and said it will begin exporting to Jordan this year, though the exact level of shipments and timeline is still unclear.

Its domestic production level stands at about 6.6 billion cubic feet per day.

‘DEEP COMMITMENT TO EGYPT’

BP said in September it will spend about $1.8 billion this year getting several fields online, making Egypt its largest investment destination worldwide for a second year running.

“For the last two years in a row we’ve invested more money in Egypt than in any other country,” BP CEO Bob Dudley said at the conference. “So this is a deep, deep commitment to Egypt.”

Total production at BP’s West Nile Development will soar to nearly 1.4 billion cubic feet per day (bcfd) after the project’s third field, Raven, comes online. About 700 million cubic feet per day will come online by April from the first two, Giza and Fayoum, Molla said.

The country’s top gas asset, Zohr, discovered by Eni in 2015, will near peak production of about 3 bcfd from 2.1 billion currently by the end of 2019, Molla said, further boosting potential export capacity.

Total CEO Patrick Pouyanne said the French oil major is considering developing downstream petrochemicals in Egypt after having acquired a stake in Idku, one of its two liquefaction plants.

Eni, which owns a stake in the country’s other liquefied natural gas plant in Damietta along with Spain’s Gas Natural has said the long idle plant should restore operations this year.

BP Chief Executive Bob Dudley, speaks on screen during the energy forum Egypt Petroleum Show (EGYPS) in Cairo, Egypt February 11, 2019. REUTERS/Nadine Awadalla

“There is no date, however there is a strong interest for all involved parties in having Damietta restart as soon as possible,” said Eni Chief Midstream Gas and Power Office Massimo Mantovani.

Molla said results of two exploration tenders held last year for 27 blocks would be announced during the three-day forum, and that it had seen “high turnout” from international companies.

He said about 80 percent of arrears to international oil companies had been paid, but did not specify the amount left. In July they stood at $1.2 billion.

Reporting by Nadine Awadalla and Aidan Lewis; Additional reporting by Ahmed Ismail and Ehab Farouk; Writing by Eric Knecht; Editing by John Stonestreet and David Evans

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