Egypt awards four offshore oil and gas exploration licenses

Egypt has awarded four new licenses to explore for oil and gas off its Mediterranean coast, weeks after Eni’s giant Zohr gas find piqued fresh international interest in the area.

Egypt’s state gas company EGAS said in a statement it had awarded one license to Britain’s BP and one to Italy’s Edison. A consortium involving BP and Eni’s Egyptian subsidiary had also picked up a bloc as had another consortium involving Eni, BP and France’s Total.

EGAS head Khaled Abdel Badie told Reuters after the announcement that Egypt was preparing to launch a new bidding round for offshore gas exploration in the Mediterranean in the first half of 2016.

Eni announced in late August it had discovered the largest known gas field in the Mediterranean off the Egyptian coast.

The Italian major predicts the Zohr field could hold 30 trillion cubic feet of gas, covering an area of about 100 square kilometres (39 square miles). It could be a game-changer for Egypt, whose $3.5 billion debts to foreign energy companies had made it increasingly difficult to attract major investments.

Egypt, which once exported gas, has become a net energy importer over the last few years as production has failed to keep up with domestic demand.

Not only has Egypt diverted to the domestic market gas originally earmarked for export, but it has failed to keep up payments to the foreign energy companies producing it.

The crisis had discouraged international energy companies from making major investments in Egypt’s oil and gas sector at a time when it needed to make new discoveries and boost output.

The Zohr find, however, is likely to encourage oil majors to look more carefully at the eastern Mediterranean region, which has yielded some significant discoveries in recent years.

The EGAS statement said the new concessions would see the companies making total investments of at least $306 million, conducting seismic studies and sinking eight discovery wells.