State-run Egyptian Natural Gas Holding Co. has awarded eight oil
and gas prospection projects in the Mediterranean Sea for an
overall minimum investment of $1.2 billion as the country seeks to
increase its fossil fuel production and reserves.
BP PLC (BP), Ireland's Petroceltic International PLC (EG5.DB),
Italy's Eni SpA (E), Edison and IEOC, a subsidiary of Eni group,
Canada's Sea Dragon Energy (SDX.V), United Arab Emirates' Dana Gas
PJSC (DANA.AD) and Australia's Pura Vida Energy NL (PVD.AU) won the
blocks, the oil ministry said in a statement posted on its website
late Tuesday.
The awards were the result of an international tender which
received 13 offers. The winning companies will drill a minimum of
18 wells and will pay $73.2 million for the licences, it said.
"Issuing international tenders is part of the ministry of oil's
strategies to intensify oil and gas exploration activities to
secure new energy supplies...and encourage international firms to
pump more investments in research, exploration and development,"
energy minister Osama Kamal said in the statement.
Mr. Kamal has previously said that investments in oil and gas
exploration are expected to reach $8.6 billion this year.
Egypt has seen its oil and gas exploration activities slowing
over the past couple of years due the continuing unrest since the
ousting of former president Hosni Mubarak. The country has been
paying hefty premiums for its crude supplies due to the weaker
Egyptian pound and difficulties in securing letters of credit for
its transactions, while a shortage of state-subsided diesel has
already paralyzed transportation in many parts of the country.
Last year, Mr. Kamal allowed private firms to imports gas to
meet the country's soaring energy demand.
The civil unrest has also led to a risky economic mix of
dwindling foreign-exchange reserves, declining tourism revenue and
costly price subsidies, economists said. To prop up the Egyptian
currency, the central bank has gone through nearly two-thirds of
its foreign-currency reserves, pushing the country to the brink of
a liquidity crisis.
Egypt is in the throes of trying to secure a $4.8 billion loan
from the International Monetary Fund, a move viewed as critical to
rescuing its economy and mending its reputation as a place to do
business.
People close to the talks say the IMF wants to see Egypt reduce
its subsidy spending as part of a reform plan for the loan. But any
subsidy changes will likely only enrage further the legions of poor
who rely daily on cheap fuel, making the already uncomfortable
summer months all that more unbearable.
Write to Summer Said at summer.said@dowjones.com
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