Gas prices were not renegotiated in North Alexandria deal

14 March 2015

Egypt says BP will be paid a maximum of $4.1 per million British Thermal Units

  • Gas prices not renegotiated on BP gas deal
  • Agreement reached on onshore facilities location
  • Three sites to be used
  • Gas prices linked to Brent crude prices

The price paid for gas from Egypt’s North Alexandria concession was not renegotiated as part of the deal to restart the $12bn gas field development project, according to the CEO of Egypt General Petroleum Company (EGPC), Tarek el-Molla.

Speaking to MEED on the sidelines of the Egypt Economic Development Conference in Sharm el-Sheikh he said that BP will be paid a maximum of $4.10 per million British Thermal Units (BTU) for gas produced from the North Alexandria Concession.

Over the last year international oil companies including Germany’s RWE have managed to secure higher gas prices from EGPC in return for resuming gas field development projects.

Onshore facilities

The key sticking point in the negotiations to restart work on the North Alexandria development, which is Egypt’s biggest ever oil and gas project, was the location of onshore facilities according to El-Molla.

He says BP’s onshore facilities were initially going to be located in the coastal town of Idku, but due to reasons connected to the revolution in 2011 BP was not able to claim the land and build its facility.

“We had to think innovatively and broke down the onshore facilities into three locations,” he says.

Two of the facilities are already in place. One in Burullus area and another in Rosetta. Both sites lie to the east of the City of Idku on Egypt’s Mediterranean coast.

The third facility will be built on a greenfield site, according to El-Molla.

Brent prices

Under BP’s deal with EGPC the price paid for gas from the North Alexandria concession is linked to the price of Brent crude with a floor price set at $3.00 per million BTU and a ceiling price of $4.10 per million BTU.

Egypt says BP will be paid a maximum of $4.1 per million British Thermal Units

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