BP Egypt Inks LNG Agreement

BP Egypt has signed an agreement with Egyptian General Petroleum Corporation (EGPC) and Egyptian Natural Gas Holding Company (EGAS) to supply natural gas to the Damietta LNG Plant and that its affiliate, BP Gas Marketing Ltd (BPGM) has signed an agreement to purchase LNG under a long-term contract from EGAS.

BP Egypt and upstream partner IEOC, a subsidiary of Italy's ENI, will deliver up to 310 million standard cubic feet a day (mmscfd) of natural gas to the LNG plant starting from 2008. In parallel, BPGM is expected to lift its share of LNG from 2005 when the Damietta LNG plant is expected to start commercial production.

Commenting on this deal, Hesham Mekawi, BP Egypt Chairman, stated: "This is a huge achievement by all parties and should allow the early development of BP's recent gas discoveries with its partners in the East Nile Delta. The agreements should help to secure continued growth in Egypt's upstream industry where BP has invested close to $14 billion over the past forty years."

Doug Rotenberg, BP Business Unit Leader for Global LNG commented: "We are extremely pleased with the LNG purchasing agreement, as we believe it should pave the way to further strengthen our relationship with EGAS and should place BP in the first phase of Egyptian LNG exports. Our commitment reflects the confidence in the competitiveness of Egyptian LNG for both European and US markets and we see this as a strong beginning to a long-term supply relationship with EGAS for our rapidly growing Atlantic Basin market portfolio."

BP, with its partners, has discovered 8 trillion cubic feet of gas in Egypt. All of the produced gas is currently sold into Egypt's domestic market, where the main use for gas is power generation. Production is mainly from Temsah, Baltim, Karous and El Qara/Nidoco (all operated by IEOC through Petrobel) and from Ha'py and Akhen (operated by GUPCO).

BP's local joint venture and operating company GUPCO (BP 50 per cent and EGPC 50 per cent) produces about 160,000 barrels a day (b/d) of oil, out of a country total of around 700,000 b/d.

BP announced recently a new gas discovery (Raven 1) in its concession block, North Alexandria. The Raven 1 exploration well was the fourth discovery in the concession, following the Taurus, Libra and Fayoum discoveries made in 2000 and 2001. The well successfully tested and flowed gas at rates up to 37.4mmscfd and 741 barrels of condensate per day.

BP operates the North Alexandria concession with a 60 per cent working interest with RWE Dea holding the remaining 40 per cent interest in the block.

The Taurt well in Ras El Barr (REB) concession in the Eastern Nile Delta encountered gas pay in four intervals. One interval was tested at 22mmscfd and was constrained by the capacity of the test equipment. The natural gas is high quality with no impurities and is similar to that of the Ha'py field.

The working interest of the REB concession is split 50/50 between BP, the operator, and ENI's local affiliate IEOC. The existing joint venture company, GUPCO, grouping BP and state oil firm EGPC, will operate any development and production.