Lukoil Overseas Starts Drilling on Egyptian Shelf

LUKOIL Overseas starts exploration drilling on the North-East Geisum offshore block in Egypt in accordance with the schedule of the exploration program.

The contractor is, a well-known Egyptian drilling company EDC, which owns a world-class self-elevating floating drilling rig Senusret. The contractor was selected as a result of the tender and consultations with Egyptian partners and government authorities.

The work will be carried out for two months at the sea depth of 35 meters. The target well depth is 1820 meters. Approximate cost of work will be about USD 6 million.

The North-East Geisum block is located in the Gulf of Suez in the Red Sea near the Egyptian coast. LUKOIL Overseas acquired the right to work on this block, as well as on the neighboring West Geisum block, in January 2003 based on the public tender organized by the Egyptian General Petroleum Corporation (EGPC). A concession agreement between LUKOIL Overseas and the Ministry of Petroleum of Egypt was signed in June 2003.

The combined expected reserves of both blocks are estimated at 183.5 million barrels of oil (maximum case). Five oil and gas prospects have been identified within the blocks. The combined area of the blocks is 175 square kilometers.

The exploration program for both blocks covers a period of four years and inter alia includes drilling of four exploration wells. The first exploration well on the West Geisum block will be spud in February 2005. The initial minimal exploration investment program is planned at USD 27.8 million.

Exploration operations at the West Geisum and North-East Geisum blocks will make it possible to merge the infrastructure on the blocks with that of the nearby WEEM field in Hurghada, also being developed by LUKOIL Overseas, achieving synergies.