The Ministry of Petroleum is 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, said in press statements to Reuters that talks are underway with the government regarding gas price adjustments. These affect some of its concession areas, including a mutual project with Shell.
Maher added that the result of negotiations with the government will determine whether Apache, headquartered in Texas, would expand its operations in Egypt.
He added that steps were taken in the past to adjust gas prices with foreign partners for new projects that have not yet entered into production. These efforts were to ensure that the price at which the state obtains gas from the partner is commensurate with the economic price for each individual project.
Maher said the price of gas will vary depending on the project and the layer from which it is extracted and whether a treatment centre is constructed or not.
Maher added that this would lead to an increase in investments from global companies, an intensification of research and exploration activities, and accelerated operations for new gas fields discovered in deep water. There would also be an increase in gas production and quantities supplied to various economic development projects across Egypt.
He added that separate agreements will be concluded for the price of gas produced by each project, and the adjustments sent to the Cabinet and Parliament. This would lead to for a new law to be passed to amend prior agreements.
The Ministry of Petroleum has reached a tentative agreement to amend the price of gas in the terms of the petroleum agreement concluded with German partner RWE in its concession area in the Delta region through Cabinet approval. The agreement will eventually be presented to legislative bodies.
It is worthy to note that the price of gas obtained by the government from foreign partners has been fixed for all projects excluding deep water initiatives for the past 14 years at $2.65 per million BTUs.