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BG Egypt to invest up to $3 bln next year - Daily News Egypt
Daily News Egypt

BG Egypt to invest up to $3 bln next year - Daily News Egypt

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BG Egypt to invest up to $3 bln next year

CAIRO: BG Egypt, a subsidiary of BG Group, plans to invest up to $3 billion on Phase VIII of its West Delta Deep Marine Concession (WDDM) by mid-2010, a company official said Sunday. “We’re coming up on Phase VIII, a fairly large project, somewhere between 24 and 32 new wells and that’s a project we …


CAIRO: BG Egypt, a subsidiary of BG Group, plans to invest up to $3 billion on Phase VIII of its West Delta Deep Marine Concession (WDDM) by mid-2010, a company official said Sunday.

“We’re coming up on Phase VIII, a fairly large project, somewhere between 24 and 32 new wells and that’s a project we are planning to sanction.six to nine months from now, said Sami Iskander, BG Group’s executive vice president for Africa, Middle East and Asia.

The onshore project is a “fairly large investment, anywhere between $2 billion to $3 billion. [It’s] very dependent on getting the partners and everyone on board, he said in an interview with Daily News Egypt at the company’s 20th anniversary celebration.

BG Egypt signed its first agreement with the Egyptian government on May 25, 1989. As the company celebrates 20, it is positioned in the market as one of the largest investors in Egypt’s natural gas business.

A reception to mark the occasion was held in the presence of Prince Andrew, The Duke of York, Petroleum Minister Sameh Fahmy, British Ambassador to Egypt Dominic Asquith, and BG executives.

Fahmy lauded BG Egypt’s “major contributions to offshore Mediterranean wells.

At the event, Iskander announced two university partnerships in the geosciences fields with Cairo University and the American University in Cairo.

The BG Egypt Public School Scholarship with the American University in Cairo (AUC) will support one state school student every five years to study in the department of petroleum and energy engineering.

The partnership with Cairo University, in collaboration with the British Council, will work to enhance the English and soft skills of geosciences students.

“A key area both for Egypt and BG Group is strengthening employability skills and industry-academic partnerships, Iskander said.

Iskander was only recently appointed to his current position as BG Group’s executive vice president and managing director of Africa, Middle East and Asia; and is the first Egyptian to hold this post.

As the company’s new EVP, Iskander will focus on growing BG Egypt’s presence, increasing their production to account for 50 percent of Egypt’s gas output, up from the current 40 percent.

He will also work to build the human resources so vital to the company’s continued success.

Making concessions

Phase VII of WDDM, which includes a new pipeline and an onshore facility at around $1 billion of spending, is currently underway and the exploration of the North Gamasa offshore concession was sanctioned earlier this year.

In the coming year, BG Egypt plans to explore two wells, one in the north part of El-Burg concession and another in North Gamasa, Isakandar said. “We’re also looking at El-Manzala and other parts of El-Burg because we have interesting finds [there].

“Egypt is a priority market and BG has a very active agenda, he said, “We are always on the lookout for more opportunities, adding that the company will start looking at gas that has not been developed.

BG Egypt, one of the main British investors in the country, accounts for some 40 percent of Egypt’s gas output, supplying both domestic and international markets.

In recovery

According to BG Egypt President Tim Blackford, the market is clearly seeing a recovery. But as a long-term investor, he said, fluctuations in the economic cycle do not affect investment plans.

“Our strategy really doesn’t change with long-term contracts even if there are price fluctuations like there have been in the past few months, Blackford said.

“We’re seeing a market recovery.and we’re already seeing this in the futures market, [and the] price recovery is encouraging, he added. “We’re regaining confidence in the international market.

With nearly half of BG Egypt’s production going to exports, company officials said because they enter into long-term contracts, their operations were not affected by the slowdown.

“In a sense you have a fixed price . if [market prices] go too low, it’s a bit upsetting because we entered into these long-term contracts, but if the prices increase then it’s good for us. On the long-term it doesn’t impact you hugely either way, Iskander said.

Throughout the course of the economic crisis, which has had varied effects on different sectors, BG Egypt officials said they “fared very well compared to competitors.

“Yes there was a downturn and prices came down, but we have a unique portfolio tied to long-term contracts and a global LNG market where we can divert cargo to the best possible market, Iskander said.

The company’s third quarter results will be announced on Wednesday.

Topics: FJP

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