Egypt signs deal for Nile Valley gas grid

• Nile Valley Gas Pipeline Plan [104,888 bytes]

Egyptian General Petroleum Co. (EGPC) has signed a franchise agreement with a group led by BG plc for extension of the Cairo area gas grid along the Nile valley. The 25-year agreement calls for BG to extend Egypt's natural gas transmission and distribution grid in four phases.

Meanwhile, BG is readying to begin drilling on West Delta Deep concession in the Nile Delta.

Gas grid

The first phase of the gas grid expansion will cost $50 million and will involve extending a pipeline from south of Kuiamat to Beni Suef. There gas will be provided to industrial consumers and more than 20,000 households.

Preparation work will also begin immediately for extension of the gas pipeline by 270 km from Beni Suef to Asyut, taking total investment to $220 million.

BG said the agreement includes provision for two further extensions of the pipeline: by 260 km from Asyut to Qena, and by 270 km from Qena to Aswan.

A new company, Nile Valley Gas Co., will be formed to undertake the project. Interest holders will be operator BG 37.5%, Edison International SpA 37.5%, Egyptian conglomerate Orascom 20%, and privately-owned Egyptian firm Middle East Gas Association 5%.

West Delta Deep

BG is operator of four Egyptian exploration licenses: West Delta Deep Marine, Rosetta, North Sinai, and North Red Sea Block 1. The company is also a 25% partner in Zaafarana oil field, currently producing 13,000 b/d.

On West Delta Deep, BG will begin drilling the first of four wells towards the end of April.

The wells will target prospects identified in a seismic survey carried out in 1996.

Last year BG drilled four wells on Rosetta and signed an agreement with EGPC for sale of Rosetta gas. On North Sinai, BG drilled a well last year which flowed at a rate of 25 MMcfd of gas on test.

On North Red Sea Block 1, BG is carrying out technical evaluation prior to drilling.

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