Bil­lions pledged for Egypt’s en­ergy sec­tor

Financial Mirror (Cyprus) - - FRONT PAGE -

En­ergy deals fea­tured high on the Eco­nomic Devel­op­ment Con­fer­ence agenda, with an ob­vi­ous pref­er­ence for up­stream ac­tiv­ity and power gen­er­a­tion, ac­cord­ing to a re­port by the Mid­dle East Strate­gic Per­spec­tives.

Re­duc­ing the debt it owns for­eign com­pa­nies and cut­ting down sub­si­dies by about a third (with a view to phas­ing them out com­pletely within five years) have con­trib­uted to restor­ing con­fi­dence in Egypt’s en­ergy sec­tor. The fol­low­ing is a list of agree­ments and MoUs signed dur­ing the three-day con­fer­ence in Sharm el Sheikh:

- BP fi­nalised a $12 bln deal to de­velop 5 tcf and 55 mln bar­rels of con­den­sates in the West Nile Delta. Pro­duc­tion is ex­pected in 2017 and is sup­posed to meet a quar­ter of Egypt’s en­ergy needs.

- BG will in­vest $4 bln in the next two years to de­velop nat­u­ral gas fields in the Mediter­ranean.

- ENI signed agree­ments worth $5 bln to be im­ple­mented over 4-5 years, in­clud­ing con­ces­sions in the Mediter­ranean, the West­ern Desert, the Nile Delta and Si­nai.

- UAE-based Dana Gas an­nounced plans to in­vest $350 mln over the next 30 months, in­clud­ing the drilling of dozens of new devel­op­ment wells.

- UAE’s Mas­dar and Saudi Ara­bia’s Acwa Power signed MoUs to de­velop up to 4 gi­gawatts (GW) of re­new­able and gas power gen­er­a­tion projects, val­ued at $15 bln.

- Siemens signed $10.5 bln in deals and MoUs to help ex­pand the elec­tric­ity net­work, which in­clude build­ing a 4.4GW com­bined­cy­cle power plant and in­stalling 2GW of wind power.

Egypt’s gas pro­duc­tion is likely to reach 63 bcm by 2019 (from 52.5 bcm in 2013). En­ergy self-suf­fi­ciency is hoped by 2018, although the dead­line is seen as am­bi­tious, the MESP re­port said. With new dis­cov­er­ies in the Mediter­ranean and else­where, in ad­di­tion to pos­si­ble sup­plies of Is­raeli and Cypriot gas, Egypt could have ac­cess to ap­prox­i­mately 74 bcm of gas by 2019, al­low­ing the coun­try to re­sume ex­ports.

Egypt is count­ing on the devel­op­ment of BP’s West Nile Delta project, which it per­ceives as the ba­sis for an early re­turn to en­ergy se­cu­rity.

In­ter­est­ingly, the Rus­sians, who have not had a ma­jor pres­ence in the Egyptian oil and gas sec­tor in the past, tra­di­tion­ally dom­i­nated by west­ern com­pa­nies, have in­her­ited a stake in BP’s West Nile Delta project. A 35% stake pre­vi­ously owned by DEA, the oil and gas unit of Ger­many’s RWE, will be passed to Let­terOne, owned by Rus­sian bil­lion­aire Mikhail Frid­man and headed by for­mer BP chief ex­ec­u­tive John Browne. Let­terOne bought DEA in March for $5.7 bln and ac­quired its as­sets, in­clud­ing those in Egypt.

Rus­sian in­volve­ment in the Egyptian en­ergy sec­tor is ex­pected to ex­pand. Be­side plans to jointly build Egypt’s first nu­clear power plant, made fol­low­ing Pres­i­dent Vladimir Putin’s visit to Cairo in Fe­bru­ary, Gazprom was one of the first com­pa­nies con­tacted by the Egyp­tians to pro­vide LNG. Some 35 ship­ments will be pro­vided in the next five years.

The gov­ern­ment is also court­ing Gazprom’s ex­plo­ration arm. A del­e­ga­tion of ex­ec­u­tives vis­ited Egypt on Fe­bru­ary 18-19 and met with of­fi­cials from the Min­istry of Petroleum to ex­plore pos­si­ble in­vest­ment in the sec­tor.

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