Statoil Takes Stake in Egyptian Block

Statoil has for the first time taken part, and been offered acreage, in an Egyptian licensing round.

The Statoil group was recently awarded the operatorship and an 80% interest in deepwater block 9 off Egypt in the 2006 EGAS international bid round.

The acreage was awarded to Statoil jointly with Sonatrach International Petroleum Exploration & Production (Sipex ) a fully owned subsidiary of Sonatrach. The latter will hold a 20% interest.

The offer is subject to finalization of a detailed production sharing agreement and approval by the Egyptian parliament.

The blocks lie in the Mediterranean, west of the Nile Delta, at water depths of about 1,000-3,000 meters.

"We are very satisfied with today's awards," says Ottar Rekdal, head of Statoil's activities in North Africa.

"This secures us an important foothold in a promising oil and gas region. Our experience from challenging field developments off Norway and core competence in the gas value chain are important building blocks as we move forward and expand our business in Egypt.

"Gaining access to acreage in Egypt fits well into Statoil's north African strategy. We are already well established in the region with exploration and productions projects in neighboring Libya and Algeria."

Statoil and Sipex are committed to drilling one exploration well and conducting seismic surveys over a four-year period. Block 9 covers an area of 8,368 square kilometers.

"The considerable water depths represent challenging operating conditions," reports Nils Helge Sorgard, vice president for global exploration Africa."

"However, we are confident that our experience from other deepwater areas around the world will enable us to carry out a successful exploration program."

In Egypt, blocks are awarded in bid rounds whereby the winning bids are determined based on both technical and commercial parameters.

Egypt produces around 1.5 million barrels of oil equivalent per day, of which 60% is gas. The considerable gas discoveries in recent years have allowed Egypt to grow the domestic gas market and to start gas exports.

Statoil opened an office for business development in Cairo in January 2006.

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