Eni, BP pouring more investment into Egypt than anywhere else

Salma El Wardany, Sam Wilkin and Tamim Elyan February 15, 2017

CAIRO (Bloomberg) -- Eni SpA will start producing from the giant Zohr natural gas field off Egypt’s Mediterranean coast by the end of 2017 and plans to invest $10 billion in the North African country over the next five years, CEO Claudio Descalzi said.

Production plans for Zohr are on schedule, and Egypt will be Eni’s top country for investment in the next two years, Descalzi said at a conference in Cairo. BP Plc, which bought a 10% stake in Zohr from Eni last year, invested more in Egypt in 2016 than in any other country and will do so again this year, the company’s CEO Bob Dudley said at the same event.

“Some pretty good things are happening here for BP, like Eni,” Dudley said on Tuesday. “In 2016-17 we’re investing more money in Egypt than any country in the world, so this is important for us, we have confidence in the government.”

The Arab world’s most populous nation was a net exporter of liquefied natural gas until 2014, when declining output and power shortages resulting from political upheaval turned it into a net importer. Egypt will buy as many as 108 cargoes of LNG this year and has run up a debt of $3.6 billion to international energy companies including Royal Dutch Shell Plc.

Egypt plans to boost its gas output by 50% by the end of 2018, from 3.8 Bcf at the end of last year, Oil Minister Tarek El-Molla said at the conference. The government is committed to repaying arrears owed to international energy companies and is optimistic it can attract more investment in exploration, production and distribution, he said.

Shell drilling

Shell will start drilling in the West Delta Deep Marine phase 9B gas field in the second quarter of this year, Mohamed El Masry, chairman of state-run Egyptian Natural Gas Holding Co., said in an interview at the event. Shell stopped drilling at the gas concession in the Nile delta last March because of the payments backlog. A Shell spokesman declined to comment on Tuesday.

BP plans to start producing at the West Nile Delta project this spring, Dudley said in an interview in Cairo.

Egypt’s government will announce a new bidding round for licenses to explore in nine areas in the next six months, El Masry said, and it “may” make a payment to Shell in the second quarter. El Masry said on Feb. 2 that the country will start exporting gas in 2019.

Egypt is also an oil importer and has nearly completed a deal to import crude from Iraq, Tarek El-Hadidi, executive chairman of state-run Egyptian General Petroleum Corp., said at the conference. It will keep its production of crude and condensate steady at 650,000 bpd, he said.

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