BP signed the final agreements for its West Nile Delta project last week
BP plc (ticker: BP) last week announced that the company signed its final agreements on the West Nile Delta (WND) project. The WND has the potential for 5 Tcf of gas and 55 MMBO of condensates. BP anticipates an investment of around $12 billion from the company and its partner, according to BP’s press release. Production is expected to start in 2017.
Production from WND is expected to reach up to 1.2 Bcf/d, equivalent to about 25% of Egypt’s current gas production. The news comes as a good sign of an improving investment climate in the country, which has been trying to attract more foreign investment for its oil and gas industry as it struggles to meet domestic demand. Most international energy firms originally entered Egypt to develop energy for export, but as consumption increased and production decreased, the government diverted energy supplies to the domestic market. The Egyptian oil ministry set gas prices at $5.45/mmBtu in an unrelated land project, possibly providing BP with a barometer on what it can expect with its oncoming ventures.
“The WND project investment is the largest foreign direct investment in Egypt, and demonstrates our continued confidence in Egypt and our commitment to unlock its energy potential,” said Bob Dudley, BP Group’s Chief Executive Officer. Dudley went on to say that production from the project would be key to the country’s future energy security.
Gas will be produced from two BP-operated concession blocks, North Alexandria and West Mediterranean Deepwater. The company believes that future exploration could add 5 to 7 Tcf, which could boost production with additional investments.
Hesham Mekawi, BP North Africa Regional President said, “BP expects to double its current gas supply to the Egyptian domestic market during this decade when the WND project reaches its peak production.” Mr. Mekawi also said that BP will continue to invest in existing oil operations in other regions of the country.
According to the company, WND will utilize existing infrastructure by tying into existing BG (ticker: BG) and BP infrastructure. BP holds about 65% equity in the project partnership.
BP makes another major gas discovery
The company also announced today that its Atoll-1 deepwater exploration well discovered approximately 50 meters (164 feet) of gas pay in the East Nile Delta. According to Mr. Dudley, the estimated potential concession exceeds 5 Tcf. Atoll-1 is expected to be the deepest well ever drilled in Egypt. It made the gas discovery after reaching a depth of 6,400 meters (about 21,000 feet) and still has another kilometer to drill to test the same reservoir section found to be gas bearing in BP’s 2013 Salamat discovery.
Atoll-1 was drilled in 923 meter (3,028 feet) water depth around 80 kilometers (about 50 miles) north of Damietta city, 15 kilometers (about 9 miles) north of Salamat, according to the press release. BP has 100% equity in the project.
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