UK energy giant BP has told MEED that it has not yet reached an agreement with Cairo to restart work on its $10bn project to develop its offshore North Alexandria gas field concession in the west of the Nile Delta.

The denial comes after a report by UK news agency Reuters on 26 June that quoted Egypt’s oil minister Sherif Ismail as saying that the project had been restarted and that production of 450 million cubic feet of gas a day would commence in 2017.

Still on hold

A spokesman for BP told MEED on 24 July that no deal had been reached and that the project remains on hold.

“There have been comments reported from various officials in recent weeks about the West Nile Delta development,” said the spokesman. “As far as we are concerned, we are making progress on negotiations, but no deal has been agreed yet.”

He said there was no timeframe planned for issuing tenders on the project.

Delays

Egypt is facing a growing energy shortage and the development of it Mediterranean gas fields including the West Nile Delta are seen as vital to increasing energy supplies in the country.

The West Nile Delta has been split into two development concessions, both operated by joint ventures between BP and Germany’s RWE Dea.

  • North Alexandria: BP holds 60 per cent of the North Alexandria concession and is the operator. With Germany’s RWE Dea holding the remaining 40 per cent.
  • West Mediterranean Deep Water: BP owns 80 per cent of the West Mediterranean Deep Water concession and is the operator with and RWE Dea owning 20 per cent of the concession.

The first phase of the West Nile Delta development will produce an estimated 5 trillion cubic feet of gas and condensate, with production from the development expected to reach up to 1 billion cubic feet of gas a day.

The development of the West Nile Delta field has seen many delays over the past three years due to political unrest in Egypt. First gas from the project was originally expected in late 2014.

The scope of the construction work includes:

  • Drilling of wells
  • Pipelines 
  • Storage tanks
  • Manifolds
  • Condensate facilities
  • Wellhead separation units
  • Utilities

Energy crisis

Egypt is facing a mounting energy shortage with oil and gas production capacity falling short of project growth in demand for energy from the country’s rapidly expanding population.

On 23 July, the Wall Street Journal reported that negotiations to import natural gas from Algeria had run into trouble due to the high price demanded by Algiers.

Negotiations between Cairo and Tel Aviv to import gas from Israel have also become increasingly sensitive due to the huge Israeli military offencive in the Gaza strip, which has triggered widespread public outrage in Egypt.