Re­view­ing gas pric­ing pro­duced from Zohr to take place by end of 2019 ac­cord­ing to agree­ment: EGPC

Ar­ti­cle to be added to new gas ex­plo­ration agree­ments to al­low amend­ing prices two years from pro­duc­tion start

The Daily News Egypt - - News - By Mo­hamed Adel

The Egyp­tian Gen­eral Petroleum Cor­po­ra­tion (EGPC) aims to re­view the price for­mula agreed upon with the Ital­ian gas com­pany ‘Eni’ by the end of this year, ac­cord­ing to the de­vel­op­ment agree­ment, in or­der to amend prices two years af­ter pro­duc­tion started in 2017.

A source at EGPC in­formed Daily News Egypt that the price of the gas pro­duced from the Zohr field is re­lated to a pric­ing for­mula with a min­i­mum of $4 per one mil­lion ther­mal units, and a max­i­mum of $5.88 per one mil­lion ther­mal units when the price of an oil bar­rel is $100 in global mar­kets.

He ex­plained that the item of re­view­ing the prices of gas pro­duced from the projects has re­cently been added to the new de­vel­op­ment agree­ments in or­der to match the changes in the mar­ket to en­cour­age for­eign part­ners to in­ject the in­vest­ments agreed upon ac­cord­ing to the plan.

EGPC pays about $4 for the one mil­lion ther­mal unit of Ital­ian Eni’s share in the gas cur­rently pro­duced from Zohr at the Shorouk con­ces­sion area in the Mediter­ranean ac­cord­ing to the price for­mula re­lated to the prices of petroleum in global mar­kets.

The source added that the de­cline in the price of crude oil in global mar­kets to about $60 per bar­rel re­duces the share of for­eign part­ners in the gas pro­duced from Zohr.

The source pointed out that the agree­ment stip­u­lates that all the pro­duc­tion from Zohr must go to the lo­cal mar­ket, how­ever, in case there was sur­plus, with the ap­proval of the petroleum min­istry, it can be ex­ported.

He said that it is planned to fin­ish im­ple­ment­ing the sixth nat­u­ral gas treat­ment unit at Zohr by the end of this month, tak­ing the to­tal ca­pac­ity of the treat­ment sta­tion to 2.4bn cu­bic feet of gas per day.

The source pointed out that the sec­ond phase at Zohr will be com­pleted by July to in­crease the to­tal amount of pro­duc­tion to 2.95bn cu­bic feet of gas per day, in­stead of 2.7bn es­ti­mated in the de­vel­op­ment plan.

He ex­plained that the com­pany aims to in­vest about $4bn in the sec­ond phase of Zohr dur­ing this year, tak­ing the to­tal in­vest­ments to $16bn.

Eni achieved the Zohr ex­plo­ration in the Mediter­ranean in Au­gust 2015. It in­cludes re­serves es­ti­mated to be 30tn cu­bic feet of gas, while daily pro­duc­tion is es­ti­mated to be 2bn cu­bic feet of gas. Daily gas pro­duc­tion is ex­pected to reach 3bn cu­bic feet of gas be­fore the end of 2019.

Pro­duc­tion from Zohr must go to the lo­cal mar­ket, how­ever, in case there was sur­plus, with the ap­proval of the petroleum min­istry, it can be ex­ported

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