BP To Invest $11bn In Egypt Gas Project

BP will invest $11bn in a project to produce natural gas from a deep-water deposit in Egypt’s Mediterranean basin, the country’s State Information Service, or SIS, reported yesterday.

BP is currently digging at a depth of 7,700m in the Mediterranean Sea to extract 1bn sq ft of natural gas per day, or about 20% of the North African country’s energy output, said oil minister Osama Kamal, according to SIS website.

The project is expected to be completed in four to five years and Egypt, which has Africa’s third-largest gas reserves, will get the extracted natural gas for 40% of its prices, he said.

BP’s chief executive Robert Dudley said the project is expected to produce 40% of Egypt’s natural gas output.

The firm started digging the well August 18 and would start exploration work next year, he added.

Separately, Egypt’s ailing economy needs 267bn pounds ($43.7bn) in investment, said Prime Minister Hisham Qandil, as Egyptian economic policy makers prepare to negotiate a $4.8bn loan from the International Monetary Fund.

Egypt’s revolution last year has left a legacy of political instability that has frightened off potential investors.

After more than a year and a half of unclear economic policies, the new government of President Mohamed Mursi, which is backed by the powerful Muslim Brotherhood, has made attracting investment and repairing its budget deficit a priority.

In comments made at the opening of yesterday’s trading session at Egypt’s Stock Exchange, Qandil said the IMF loan is one way Egypt hopes to rejuvenate its economy.

Qandil has said he expects to complete an IMF loan agreement before the end of the year.

While the deal will only meet a portion of Egypt’s estimated $12bn in external financing needs, policymakers hope the global lender’s seal of approval will attract much-needed interest from foreign investors.

Gulf-times