The MoU came after EGAS committed to supply about 600 million cubic feet a day (cf/d) of gas feedstock for the proposed project, which will have an operating life of 20 years.

'The agreement advances our discussions on the GTL opportunities, which have been ongoing for a number of years,' Ivanhoe president and chief executive officer Leon Daniel said. EGAS and Ivanhoe have been in negotiations since 2000 for the proposed scheme.

The next stage in the project implementation will be the signing of a gas sales agreement. 'The project will be feasible only at a certain price. Using the Syntroleum technology, you are normally looking at about $2 a million BTUs [British thermal units],' says an industry source.

Ivanhoe has already started work on the project's engineering and design. The plant will have capacity of 45,000 barrels a day (b/d), with an option to double capacity to 90,000 b/d through the construction of a second train. The Canadian firm also plans to carry out detailed engineering and design and market analysis studies.

The Egyptian project is Ivanhoe's second attempt to build a GTL plant in the Middle East. In mid-2003, it announced that it had terminated negotiations with Qatar Petroleum (QP)over its planned integrated project. The proposed plant was designed to have capacity of 185,000 b/d.