Egypt Mulls Reducing Rigs in Gulf of Suez after Spill

CAIRO (Zawya Dow Jones), June 24, 2010

Egypt is studying reducing the number of oil rigs in the Gulf of Suez after a recent oil spill near the shores of the Red Sea city of Hurghada, a major international tourism destination.

"We are currently studying reducing the number of oil platforms in the Gulf of Suez," Egyptian Oil Minister Sameh Fahmy said in a June 22 statement.

The ministry is preparing to send four ships to prevent the oil from reaching the shore and will send planes to monitor the area to report on any future spills, Fahmy said.

The development comes after oil emerged in the Gulf of Suez near Hurghada on June 16. Around 188 oil platforms currently operate in the Gulf waters, according to the ministry.

Egypt produced 742,000 barrels a day of crude in 2009, up 2.1% on the previous year, according to the latest BP statistical review. The Gulf of Suez is one of five main oil production areas in the country.

According to Egypt's oil ministry, the source of the Gulf of Suez spill has yet to be verified. The ministry said it is currently investigating four scenarios that could be behind the spill--a leak in a nearby platform; oil leaked from a tanker in the Gulf of Suez; theft of equipment from an unused platform; or extremely high temperatures that can cause oil to flow from rocks in the area.

The Hurghada Environmental Protection and Conservation Association, or HEPCA, in a statement late Wednesday said the oil spill came from a rig located around 50 miles north of Hurghada that began to leak on June 16 and that the leak had been sealed.

An area known as the Northern Islands was the most impacted region. The islands are one of the few pristine areas in the northern Egyptian Red Sea, and are of high ecological value as they host a number of key habitats, including mangroves, sea grass beds, protected bird nesting grounds, turtle nesting grounds and an extensive reef system, according to HEPCA.

"The governorate has committed all its resources in manual cleanups at nearly all affected beaches in cooperation with the local community," HEPCA said. "The cleanup efforts over the past five days have been outstanding, over 90% of the impacted beaches on the mainland have been entirely cleaned."

Dive operators said there is no apparent damage to any dive sites and that business is back to normal. Tourism represents roughly 11% of Egypt's gross domestic product, with more than 12 million tourists visiting the country in 2009. Hurghada attracts mainly German, Russian and Polish tourists.

"Three days ago we could see some oil close to the shore, but far away from the diving site and away from the Marine," Niklas Funk, owner of Colona Divers in Hurghada, told Zawya Dow Jones.

"There were no cancellations, however we got queries from tour guides and received an official letter from the Chamber of Diving and Water Sports mentioning what happened," he said.

Thomas Kapars, a diving instructor at Orca diving club, also said that he could see "small pieces of oil spill" and that there were no cancellations.

HEPCA said it is awaiting an assessment of the damages from the Nature Conservation Sector as well as a statement identifying the rig that is spewing out the oil.

Concerns about the spill come amid ongoing efforts by BP to contain a massive oil spill in the Gulf of Mexico, which was caused by the explosion and sinking of the Deepwater Horizon drilling rig in late April. Government and independent scientists estimate that about 35,000 to 60,000 barrels of oil a day are flowing from the well.

Copyright (c) 2010 Dow Jones & Company, Inc.

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