Success: the EGPC, responsible for overseeing the latest exploration round in Egypt, expressed relief at the level of interest from international oil companies
REUTERS/SCANPIX
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By NASSIR SHIRKHANI London
01 November 2012 23:59 GMT INTERNATIONAL oil companies have reacted positively to Egypt’s first post-revolution onshore licensing round, picking up 11 of the 15 blocks on offer despite financial and political problems.
Oil company sources confirmed the awards to Upstream, though formal announcements have yet to be made.
Sources told Upstream that Canada’s TransGlobe Energy Corporation has emerged as the biggest winner, with four blocks, followed by Anglo-Dutch supermajor Shell, which added two more concessions to its existing acreage in Egypt.
US independent Apache Energy, the largest oil producer in the prolific Western Desert, bid for six blocks but managed to pick up only one amid tough competition.
Other successful bidders included Dubai-controlled Dragon Oil, which is making its debut in Egypt.
Privately-owned Greek player Vegas Oil & Gas, South Korea-owned and UK-based Dana Petrol-eum and Germany’s RWE Dea also added to their existing acreage in the country, picking up one block each. State-owned Egyptian General Petroleum Corporation (EGPC), which is overseeing the onshore round, has expressed relief at the level of interest.
However, oil industry sources said EGPC may have skewed the round to include only good blocks to lure investors and present a picture of normality.
Moreover, the company extended the deadline on several occasions to give bidders ample time to make up their minds and consider bidding strategies.
New investors largely shunned the round, unwilling to take the plunge into Egypt’s current political and financial abyss.
The bid round comes at a time of serious financial problems for EGPC, which is facing mounting debts amid rising subsidies for refined products and an inability to secure new financing.
The company has been running behind schedule with payments to independent oil companies and especially to smaller players.
While the independents have managed to sustain output since Mubarak was toppled, exploration activity, especially in gas-prone offshore areas, has suffered.
Oil and gas industry attention will now turn to the current offshore licensing round being overseen by Egyptian Natural Gas Holding Company, which is offering 15 blocks, including six near the maritime borders with Israel and Cyprus, where there have been significant gas discoveries in the Levant basin.
The closing date for this round is 14 November and it will be of particular interest to deep-water exploration players keen to gain access to the Levant basin’s huge potential, but not via Israel, Cyprus or the Lebanon, wherepolitical risks are of major concern.
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