The UK energy company BG Group has signed a heads of agreement with Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (EGAS), agreeing to invest $4bn developing phase 9b of its West Delta Deep Marine (WDDM) project.

The investment will be made over three to four years according to BG Egypt president Arshad Sufi, who spoke to MEED on the sidelines of the Egypt Economic Development Conference in Sharm el-Sheikh.

Previously BG Group had said that the release of funds for any further development of WDDM, including Phase 9b, remained contingent upon an improvement in the investment climate including a significant improvement in the outstanding receivable position.

Debt repayments

Since late 2013 the Egyptian government has managed to slash its debt to international oil companies by around fifty per cent.

Outstanding debts now stand at $3.1bn, according to Tarek El Molla, the chairman of Egypt Egyptian General Petroleum Corporation (EGPC).

BG has not commented on how much extra capacity will be added to the West Delta Deep Marine concession by phase 9b.

“We will drill eight or nine wells during phase 9b,” Sufi said.

As part of the agreement BG has renegotiated gas prices.

It will be paid for $5.88 per million British Thermal Units (BTU) for any additional gas produced from the concession.

BG will be paid the previously agreed price of $3.95 for gas produced within the capacity limits of the field prior to the deal.

Exploration

“We have the same objectives as the Egyptian government when it comes to increasing gas production,” Sufi said.

BG invested $1.5bn in phase 9a of the WDDM project, which comprised of 9 wells, and included the installation of an upgraded well control system that enabled it to bring new wells online while maintaining supply from existing wells.

First gas from Phase 9a was delivered in July 2014.

Egypt is currently looking to ramp up exploration activities and investment in oil and gas infrastructure in an effort to reverse declines in its gas production.

Egyptian production peaked in 2009, averaging 6.07 billion cubic feet a day (cf/d), according to the BP Statistical Review of Energy.

Between 2009 and 2013, it dropped by 10 per cent, averaging 5.42 billion cf/d in 2013.

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