BP reached an agreement to buy 10% of Eni’s Shorouk offshore concession for $375m. This concession includes the massive Zohr gas field which is estimated at 30tn cubic feet.
The two companies agreed that BP could purchase another 5% of the concession before the end of 2017, which will be acquired under the same terms of agreement. BP will reimburse Eni with $150m for past expenses from exploration and pre-production.
Although Egypt is rich in hydrocarbons, ensuring reliable, affordable, and sustainable energy is still a major challenge for the state, especially after the country’s shift in recent years from being an exporter of natural gas to an importer.
In the period between 2003 and 2011, Egypt began exporting gas to Jordan, Israel, and various other markets through two liquefied natural gas facilities. Egypt’s income from gas exports reached $3.2bn by fiscal year (FY) 2007/2008.
The newly discovered Zohr gas field is bound to be the solution for Egypt’s energy challenges. With estimated reserves of almost 3tn cubic feet, it will cover all the Egyptian market needs.
This agreement reinforces the partnership between BP and Eni in Egypt, following their announcement of a significant gas discovery in the East Nile Delta in June.
BP announced that it has plans to invest $13bn in Egypt by 2020, according to a statement from the UK embassy in November, marking Egypt as one of its key growth markets. It wants to double production there in the coming four years and sell into the growing domestic market.