Cost of development behind stranded gas: Petroleum officials

Daily News Egypt
3 Min Read

Egyptian petroleum officials have said that development costs are behind Egypt’s suffering from the issue of stranded gas – a term referring to discovered gas that is un-exploitable due to economic or physical reasons.

The announcements came on Wednesday, during the roundtable discussion organised by Egypt Oil and Gas Company . The event was under the patronage of Minister of Petroleum Sherif Ismail.

Egypt has a high demand for gas and oil to cover its domestic needs, Mahfouz El-Bony, the vice president of E-Gas said.

Egypt is an oil mature country, El-Bony continued, adding that 66% of the country’s gas production comes from the Mediterranean Sea with approximately 26% from the Western Desert.

El-Bony added that the easy gas and oil are almost all discovered, however the country still needs to discover the stranded gas.

“We are seeking a 0% stranded gas,” said the vice chairman for production and field development Osama Elbakly.

Shell country chairman and managing director Aidan Murphy said that Egypt has a wealth of onshore geological data.

“The issue is not identifying where the stranded gas is but whether it is economic to produce,” Murphy said. “[The issue is] what are the technical and development cost for developing this gas.”

Mostafa Mounes, vice chairman for production at Egyptian General Petroleum Corporation (EGPC), said that one of the barriers facing development is the cost, including potential deep water discoveries. He added that specific economics need to be placed for the deep water discoveries.

The Egyptian government is currently engaged in negotiations with British Gas, Apache, and other foreign companies to adjust gas prices for new projects linked with production in the near future.

A senior official with the Ministry of Petroleum revealed that negotiations are underway with British Gas to re-price gas for the B9 stage project. This is set to add approximately 500m cubic feet of gas to production throughout the coming year.

Thomas Maher, vice chairman and general manager of Apache Operations in Egypt, told Daily News Egypt on the side-lines of the event that the contract has not yet been signed. He added that the company hopes to sign it before the end of November.

During 2013 and 2014, approximately 36 concession agreements in which 153 wells are to be drilled have been ratified. The country has additional 20 agreements that are under ratifications.

During their discussions, the petroleum official said there were talks on the reasons behind why several gas resources are still undeveloped as well as the economic and physical challenges that unlock the country’s gas assets. The roundtable also discussed the possible ways to monetise stranded gas using leading technologies and the measures required to maximise domestic gas resources.

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