(Photo Cabinet Handout)
The UK’s third largest oil and gas producer British Gas Group (BG) plans to invest $1.5bn in Egypt in the second half of 2014 (2H 2014) in order to increase its natural gas production, a Sunday statement from the cabinet said.
The announcement was made during a Sunday meeting between interim Prime Minister Ibrahim Mehleb and representatives of BG, and was attended by Minister of Petroleum Sherif Ismail.
BG’s natural gas production is expected to “gradually” increase to record 500m cubic feet of gas per day, which the company said will have a positive effect in meeting the domestic demands of the Egyptian market.
BG said in January that its 2014 and 2015 production would be negatively affected by the turmoil in Egypt. Blaming a disruption in Egypt’s exports, the British firm reported its first quarterly loss since 2000.
During the meeting, Mehleb called for paying BG the debt owed by Egypt, which recorded three years in arrears.
Egypt’s debt to foreign oil companies increased to approximately $6bn, from $5.7bn in March, said Khaled Abdel Badie, president of the Egyptian Natural Gas Holding Company (EGAS) in May, promising the payment of approximately $1bn over the next two months.
After the January 2011 revolution, Egypt has been delaying payments to foreign oil and gas firms due to a decline in international foreign reserves. By the end of 2012, BG was owed $1.3bn from Egypt, according to Reuters.
Some foreign oil companies have reduced their investments in Egypt, causing the average production to record 5.1bn cubic feet per day, and the crude oil average to register 690,000 barrels per day, down from 5.7bn cubic feet of gas per day and 695,000 barrels of crude oil as of 2010, Abdel Badie added.
The country’s natural gas production had slumped in December by 11.86%, recording 3,353 tonnes, according to the state-owned Information and Decision Support Centre (IDSC).
With the aim of boosting Egypt’s oil and gas production, Minister of Petroleum Sherif Ismail signed in March three separate $717m agreements with British and Canadian firms for oil and natural gas exploration in the Mediterranean and Nile Delta regions.
