Egyptian Natural Gas Holding Company (EGAS) is currently preparing a 20-year gas development masterplan, which in its first stage will require $6,200 million of investment over the next five years. According to EGAS chairman Mohammed Tawila, proven gas reserves stood at 62 trillion cubic feet (tcf) at the end of last year, and total recoverable reserves are now estimated at some 110 tcf. Establishing new companies is a preparatory step towards developing this natural resource.

The latest arrival on the scene is Tharwa, or 'treasure trove', which will be involved in upstream gas exploration and production, mainly providing engineering services for foreign and local companies - including EGAS - in the fields of exploration and pipeline construction. Tharwa was set up with $800 million of subscribed capital, of which $400 million is paid in. The principal shareholders in the new company are state-owned entities Egyptian General Petroleum Corporation (EGPC), Ganoub el-Wadi Petroleum Company (Ganope), itself a newcomer to the local market, and National Investment Bank.

Despite the structure of its holding company, Tharwa is considered very much a private entity. 'At the moment we are still awaiting final approval to set up the company, and we are still setting up the shareholder structure, but once registration is complete we will start work on an IPO [initial public offering],' says chairman Ahmed Darwish. 'We expect to be listed by the end of the year, possibly much sooner.'

Tharwa has been provisionally allocated six offshore blocks to conduct exploration work and assess seismic data gathered by the Petroleum Ministry over the past decade. Four of the concession areas cover about 60,000 square kilometres in the northwest Mediterranean area. The remaining two, offshore the Nile Delta and in the Red Sea, between them cover nearly 5,000 square kilometres. Total recoverable reserves are estimated at about 1.8 tcf. 'We may farm one or more of these concessions out to international operators,' says Darwish.

Fresh exploration efforts are also under way in the south, where China National Petroleum Corporation (CNPC) was recently awarded exploration rights to block 3. This is one of three exploration concessions covering more than 95,000 square kilometres either side of the Nile between Aswan and Naga Hammadi. The block, awarded on a production sharing basis, covers 42,305 square kilometres of desert in the western Komombo region, between the Toshka valley and the Nile. Following an agreed exploration period, CNPC has the option to take up a 20-year development lease following the first discovery of oil or gas, with an optional five-year extension period.

The concessions were the first to be tendered by Ganope, which in mid-2003 became the fourth pillar of the Petroleum Ministry, alongside EGPC, EGAS and Egyptian Petrochemicals Holding Company (ECHEM). Ganope is now responsible for overseeing all upstream and downstream development in Upper Egypt, with its northern boundary delineated by the 28th parallel.

'This is an extremely exciting area, and there has really been very little exploration since [the US'] Conoco was there,' says Ganope chairman Hassan Akl, former vice-president of EGPC. 'We are still in negotiation over one of the blocks on offer, and we expect to have a new bid round in May.'

Activity is also picking up downstream, where the first real results of ECHEM's 20-year masterplan, launched in January 2003, can be seen as company formation progresses on the handful of projects prioritised in the first phase of the scheme. 'We have approval from the investment authority for five of the projects and we are still awaiting approval for one more, which we expect to get within 12 months,' says ECHEM chairman Sharif Ismail. 'On the methanol and propylene projects we expect to complete formation of the companies any time now. It is very encouraging.'

Company registration was completed in November for the estimated $196 million linear alkyl benzene (LAB) project to be built in Alexandria. And ECHEM is finalising details of a planned 350,000-tonne-a-year (t/y) propane dehydrogenation (PDH) and propylene complex, being developed in partnership with Oriental Petrochemicals Company (OPC) on the Gulf of Suez. ECHEM is also considering possible changes to the third project in phase 1, which calls for the construction of a 1.7 million-t/y methanol plant. The company plans to conduct a revised feasibility study and is awaiting the approval of funding from the US Trade & Development Agency before proceeding.

The government has been shy of revealing details about the development of the petrochemicals masterplan since it was first launched 15 months ago, but work has been progressing quietly behind the scenes. 'On projects of this size, there is a period where it seems nothing much is happening, but actually a lot is going on,' says Ismail.

'Firstly, you have to have to hire an international bank to conduct a financial feasibility study, then you have to arrange agreements with offtakers and look at feedstock agreements - looking both at the availability of feedstock and the commercial terms of the agreement itself.

'Once you have done all of that, you have to sit down with the founding investors, present what has been done so far, and they in turn have to go to their boards and their shareholders to get approval.

Adds Ismail: 'You need an internationally recognised partner and on a project costing half a billion dollars even the feasibility study takes time and it takes money. This stage does not get much advertising, but they are activities that have to be done and they have to be done right. Now we are past this phase, and it is time for implementation.'