Egypt eyes Mediterranean gas hub

Eni SPA, Egypt’s largest foreign oil and gas operator, signed a strategic framework agreement with the Egyptian government and government oil and gas entities to develop joint upstream and downstream initiatives even as it brought a Western Desert field on line 45 days after its discovery.

July 28, 2010

2 min read

By OGJ editors
HOUSTON, July 28 -- Eni SPA, Egypt’s largest foreign oil and gas operator, signed a strategic framework agreement with the Egyptian government and government oil and gas entities to develop joint upstream and downstream initiatives even as it brought a Western Desert field on line 45 days after its discovery.

Eni said the agreement reinforces its cooperation, which dates to 1954, with Egypt’s Ministry of Petroleum and state Egyptian General Petroleum Corp. (EGPC) and Egyptian Natural Gas Holding Co. (EGAS).

The agreement follows a May 2009 cooperation initiative and calls for:

• Initiatives in the Mediterranean basin through a joint venture between Eni, EGPC, and-or EGAS including mutual information exchange and joint studies to pursue common projects.

• The participation of EGPC and-or EGAS in Eni upstream oil and gas activities outside Egypt, including development of oil fields in Iraq and Gabon.

• An initiative sponsored by the ministry that seeks to secure rights for Eni to acquire gas transportation capacity in the Arab Gas Pipeline system in accordance with the intergovernmental measures already present among the countries involved with the pipeline.

The Arab Gas Pipeline transports gas from Egypt to Jordan, Syria, and Lebanon and may be expanded and interconnected to other gas transport systems in the future. The parties also envisage flexibility to use this system for physical gas swaps and transportation of purchased gas to and from Egypt.

The above mentioned initiatives will form the foundation for developing a preeminent Mediterranean gas hub in Egypt, Eni said.

Eni, which operates in Egypt through its subsidiary International Egyptian Oil Co., (IEOC) placed on production Arcadia field on the Meleiha concession and plans to drill four more wells in 2010-11 to bring output to 3,000 b/d of oil equivalent.

Eni didn’t give the discovery well’s rate but said it is producing from the Lower Cretaceous Alam El Bueib formation and proved gas potential in the Jurassic Katatba formation.

Eni, through IEOC, has a 56% participating interest in the concession. The other owners are OAO Lukoil 24% and Mitsui & Co. 20%. Agiba Petroleum, an operating entity owned equally by IEOC and the EGPC, is the operator of Arcadia.

Agiba is shooting a 3D seismic survey on Meleiha targeting deep Lower Cretaceous and Jurassic formations that bear unexploited exploration potential.