Oil firms in Egypt plan to cut costs by sharing equipment

23 May 2008
Leading international companies operating in Egypt’s oil and gas sector have submitted a request to the government to pool their resources in an effort to fight spiralling inflation.

At least four companies are understood to have discussed sharing facilities such as rigs, support vessels and seismic equipment, in a bid to cut costs and reduce supply lead times.

“A lot of companies are suffering from the same set of problems when it comes to accessing these items,” the executive of one Asian oil company tells MEED. “So we are trying to develop an informal agreement where we can share resources during these boom times.”

He says the companies have sent a request to sanction the move to the Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (Egas).

“We could go ahead and do it ourselves but it is always wise to receive government approval for anything out of the ordinary like this,” says the executive. “They are looking at the letter at the moment, but we do not yet know when we will get an answer.”

Figures released by consultant Cambridge Energy Research Associates (Cera) on 14 May show that the cost of constructing new oil and gas facilities has increased by 6 per cent over the past six months. The latest rises mean the cost has now doubled since 2005.

Specialised deepwater equipment that is required for sub-sea projects, particularly umbilicals and control systems, suffered the largest increase of any area on Cera’s index.

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