Egypt inks 6 new Oil and Gas Exploration Agreements – Minister

The Egyptian Petroleum Ministry said it signed six oil and gas petroleum exploration agreements in the Western Desert and Gulf of Suez.

Petroleum Minister Sherif Ismail signed the agreements with The Netherland’s Shell, Italy’s Eni, the United Kingdom’s British Petroleum, Canada’s TransGlobe, and Egypt’s Tharwa and Egyptian General Petroleum Corporation, the ministry said in a statement.

The deals are worth $271.5 million in investments, in addition to $124 million worth of grants that were allocated for drilling 41 wells.

Gas exploration companies have shown reluctance to develop untapped gas in Egyptian waters for reasons including payment by Egypt’s government which, they say, hardly covers the costs of investment.

Egypt has paid a new installment worth $2.1 billion of the sum it owes foreign energy firms, bringing its total accumulated debt down to $3.1 billion, Ismail said in December 2014.

Almost one-fifth of Egypt’s state spending goes to energy product subsidies. The state has launched a plan to rid it completely of energy subsidies within three to five years.

According to the minister, the sum of Egypt’s oil subsidies could decrease by up to 30 percent during the second half of the fiscal year 2014/2015 should the worldwide drop in oil prices persist.

Oil prices dramatically dropped worldwide during the past six months, by almost 46 percent, with no sign from oil producing countries of an intention to slow down oil production and control the drop in prices.