BP wants to sell its entire 50% stake and operatorship in the Offshore North Sinai block where US-based Burlington Resources owns the remaining 50% stake.
GAIL became interested in this property in May this year on a tip-off from Ernst & Young. "BP decided that Offshore North Sinai is not core to its portfolio in Egypt," we learn. GAIL does not want to be operator.
It is presently busy evaluating reports from technical, legal and financial consultants hired to carry out due diligence of the Egyptian block.
Offshore North Sinai is a shallow water block in depths of 60 meters and lies in the Eastern Nile Delta of Egypt. Three discoveries were made on this block in 1997: Tao, Kamose and Seti Plio. The Tao field has been covered by 3D seismic while the other two fields have been surveyed with 2D. Tao is also the largest field, with estimated in place gas reserves of around 1 trillion cubic feet. Kamose is smaller, with only 1.41bn cubic meters. Only four wells have been drilled in the three prospects. BP estimates that six small structures within Offshore North Sinai hold another 9.91bn cubic meters of gas. BP also estimates that it will cost between $223m and $483m to develop the three fields and exploration prospects with different 'tie-back' options.
Initial plans are to develop only the Tao field by drilling about six wells connected to a single offshore platform where a 22-inch diameter pipeline will transport gas 65-km to the onshore processing facility at Romanna. Development of the Tao field envisages CAPEX of $212m. Under the gas sales agreement with Egyptian authorities, first gas must land on December 31, 2006. Every day, 3.68m cm gas will be sold to a state-owned company, which has signed a 75% take-or-pay contract with the Offshore North Sinai consortium.
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