Gaz De France Strengthens its Presence in Egyptian Upstream
Gaz de France has acquired a 45% stake in the Alam El Shawish West license in Egypt from Vegas Oil & Gas.
Covering 1,075 square kilometer, this license is located in the Abu Gharadig Basin (western desert), approximately 250 kilometers southwest of Alexandria. Several significant discoveries have already been made there, and an exploration program is still underway. Oil production is to begin very shortly, followed by natural gas production in the years to come. Vegas Oil & Gas will remain the operator for the license.
This transaction, which is still subject to approval by the Egyptian authorities, will enable the Group, in line with a production sharing agreement, to increase its portfolio of reserves by at least 30 million of barrel of oil equivalent, according to preliminary estimates. This volume is subject to positive re-evaluation, as discoveries may unravel.
This new acquisition confirms the Group's position involvement in the natural gas sector in Egypt. Gaz de France has been present on Egyptian offshore since 2001. More specifically, the Group has been operating the West El Burullus concession, off the coast of Alexandria, since 2005. The Group has a 50% stake in this 1,364 square kilometer block, where a first exploration well will be drilled at the start of 2008.
Gaz de France will thus increase the security and diversification of its E&P portfolio. In light of recent oil and gas discoveries in Egypt, this country is of great interest for European and even American supplies.
Since 2005, Gaz de France has been the main buyer of Egyptian gas. Indeed, the Group has signed a 20-year LNG purchasing agreement with EGPC, EGAS, BG and Petronas, covering 4.8 billion cu.m of natural gas per year from the Idku liquefaction plant, east of Alexandria. Gaz de France also holds a 5% stake in the Idku liquefaction facility.
Today, Egypt represents the Group's fifth largest supplier, accounting for around 10% of its natural gas supplies.
North Africa, and more specifically Egypt and Algeria, currently represents one of the main area for developing Gaz de France's exploration-production activities outside of Europe. In this way, the Group is looking to strengthen its presence on Egyptian upstream in connection with the various calls for tenders, which shall be issued shortly by the Egyptian authorities.
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