LNG

UK major BP and state-owned Abu Dhabi National Oil Company (ADNOC) in the United Arab Emirates plan to form a joint venture in Egypt that will initially focus on natural gas and will incorporate Egyptian concession stakes held by BP.

The joint venture is expected to be formed in the second half of 2024 and will be 51 percent owned by BP and 49 percent by ADNOC.

The BP-ADNOC Egyptian joint venture was originally planned to be the second phase of cooperation between the two companies in the Eastern Mediterranean gas and LNG province after the planned acquisition of a 50 percent stake in Israeli gas producer NewMed Energy.

Negotiations on the proposed NewMed agreement for BP and ADNOC started in March 2023, though have been stalled since the start of Israel’s war against Hamas terrorists started in October.

Egyptian interests

“As part of the agreement, BP will contribute its interests in three development concessions, as well as exploration agreements in Egypt to the new joint venture,” said a statement.

“ADNOC will make a proportionate cash contribution which can be used for future growth opportunities,” they added.

This is the first major natural gas deal for BP under new Chief Executive Murray Auchincloss.

“The announcement with BP represents a significant step forward as ADNOC builds its international natural gas portfolio,” said Musabbeh Al Kaabi, ADNOC executive director for low carbon solutions and international growth.

“This progressive joint venture partnership will enhance Egyptian energy security and the economic potential of the region’s most populous Arab country,” Al-Kaabi explained.

Strategic partners

“Building on our long-standing strategic partnership with BP, ADNOC looks forward to continue exploring other opportunities,” he added.

William Lin, BP’s executive vice president of regions, corporates and solutions, said that the “dynamic joint venture” offered a platform for international growth.

“Together, we will build on the 60 years of safe and efficient operations of BP and its partners in Egypt,” Lin stated.

The natural gas concession to be included in the joint venture include BP’s 10 percent in the Shorouk block containing Egypt’s huge Zohr gas field.

BP’s 100-percent owned North Damietta interests are also included along with BP’s 50-percent stake in the North El Burg concession with the undeveloped Satis field.

Three other exploration concession included are North El Tabya, Bellatrix-Seti East and the North El Fayrouz block.

Egypt’s Petroleum and Mineral Resources Minister Tareq El-Molla has said that Egypt was ready to meet more of the increased demand for natural gas in Europe as its LNG exports have increased to 8 million tonnes per annum in 2022 and the capacity is there for growth in 2023.

“Efforts exerted over the past years have made of Egypt one of the solutions to the ongoing energy problem,” said the Minister in a keynote speech to the eighth Egypt Oil and Gas Convention on November 27 in Cairo.

The convention was taking place at the Dusit Thani Lakeview Hotel in the Egyptian capital through November 29.

El-Molla noted that Egypt had the capacity to export up to 12 MTPA of LNG annually from the two plants located east of the Mediterranean city of Alexandria.

He said that out of the total of LNG cargo exports from the Idku LNG plant and the Damietta facility about 90 percent were delivered to Europe.

He noted that the successes of the petroleum sector in Egypt was due to the integrated strategy of partnerships between the public and private sectors and was fully supported by the government of President Abdel Fattah El-Sisi.

“The petroleum sector is also seeking mechanisms of action that would maximize cooperation with international partners to be able to make optimal use of our natural resources,” said the Minister.

The Minister said that the strategy rested on increasing and sustaining oil and natural gas production while also reducing carbon emissions.

Feed-gas boosted

Egypt is set to increase LNG supplies by almost 30 percent this year compared with the 6.1MT shipped in 2021 as feed-gas supplies have stabilised.

The Minister added that Egypt's revenues from the exports of LNG, petrochemicals and petroleum products would amount in 2022 to $19 billion.

He said that Egypt was working towards developing energy sources of all kinds simultaneously, be they traditional energy sources, especially natural gas, or renewable sources like solar energy and wind.

Egypt’s previous natural gas shortages were solved by Eni’s Zohr gas field discovery in the East Med and other gas finds in the nation’s extensive oil and gas basins leading to a re-start of the Damietta LNG plant in February 2021 after it had been idle since the end of 2012.

The Egyptian domestic natural gas market also receives pipeline gas from Israel.

The Damietta facility has as its shareholders the Italian energy company Eni as well as two of Egypt’s state-owned companies, Egyptian Natural Gas Holding Company (EGAS) and Egyptian General Petroleum Corp. (EGPC).

The facility has nameplate capacity of 5 MTPA and with Eni owning 50 percent of the plant while EGAS and EGPC hold 40 percent and 10 percent respectively.

The second Egyptian plant, the Idku facility, has 7.2 MTPA of capacity from two Trains and is operated by Shell.

Egypt plans to construct a $7.5-billion petrochemicals, energy and bunkering complex at Ain Sokhna in the Gulf of Suex where it previously imported LNG during the era of natural gas shortages before the Zohr gas field and other discoveries were made in the Eastern Mediterranean and the Nile Basin.

The Egyptian government said the facility would be constructed on a 3.65 million square metres site and is the latest instalment in the country’s comeback story as an LNG exporter and now with plans to build its East Med energy hub.

The deal to develop the complex is between the Red Sea National Refining and Petrochemicals Company and the Suez Canal Economic Zone's development company. They aim to produce value-added petroleum products to fill Egypt's domestic needs and enable exports.

“The products include polyethylene, polypropylene, polyester, bunkering fuel and other petroleum and chemical products,” said a statement.

Egypt’s gas crisis during the “Arab Spring” social upheavals in North Africa and the Middle East in 2014 led to the diversion of natural gas supplies away from LNG production to meet growing domestic demand and to avoid power cuts.

The Gulf of Suez is a main transit point for global shipping and the development of bunkering will be part of the business.

Before the bringing on stream of the Zohr field in the East Med in 2017, Egypt had been forced to import LNG from 2015 in two floating storage and regasification units deployed at Ain Sokhna.

The Egyptians halted LNG imports two years ago and have now started regular exports of LNG from their two liquefaction facilities at Idku and Damietta, east of the port of Alexandria.

The Idku LNG export plant has been on stream again since 2017 under the operatorship of Royal Dutch Shell, which acquired original operator BG Group.

The Damietta facility only re-started operations and exports in February 2021.

With Damietta back on stream, Egypt added 4.5 million tonnes per annum of LNG output to its export volumes now totalling 12.5 MTPA.

The move forward for Damietta came after the resolution of  a long-standing dispute between the shareholders over contracts because of the closure.

Naturgy Energy, the Spain-based European utility, agreed to sell its stake in the Damietta plant and to rescind its Egyptian gas contracts on departing from the Unión Fenosa Gas (UFG) joint venture.

Naturgy’s UFG partners, Italian Eni company and the Egyptian Natural Gas Holding Company (Egas), reached the agreement under which Naturgy received a series of payments adding up to US$600 million.

Eni has taken over the contract for the purchase of natural gas for the LNG plant and receives corresponding liquefaction rights.

Italian energy company Eni said Egypt was on track to regain its former full LNG export capacity as the first cargo was shipped from the Damietta plant east of Alexandria, shut down in 2012, firstly because of feed-gas shortages and then from 2017 over a dispute among shareholders.

Eni said the re-start was made possible after an agreement was reached in December 2020 aimed at settling all disputes between the shareholders linked to the long shutdown.

“At this stage the agreement has already received all the authorizations of the competent authorities and its final closing is expected in the first half of March,” explained Eni.

“The agreement comes at an important moment, when also thanks to the fast time to market of Eni's natural gas discoveries, especially the ones in the Zohr and Nooros fields, Egypt has regained its full capacity to meet domestic gas demand and can allocate surplus production for export through its LNG plants,” stated Eni.

With Damietta back on stream, Egypt can add 4.5 million tonnes per annum of output to its export volumes now totalling 12.5 MTPA.

The move forward for Damietta came after the resolution of the long-standing dispute between the shareholders over contracts because of the closure.

Naturgy, the Spain-based European utility, agreed to sell its stake in the Damietta plant and to rescind its Egyptian gas contracts on departing from the Unión Fenosa Gas (UFG) joint venture.

Naturgy’s UFG partners, Eni and the Egyptian Natural Gas Holding Company (Egas), reached the agreement under which Naturgy would receive a series of payments adding up to US$600 million.

The Spanish utility is also receiving most of UFG’s assets outside of Egypt as well as being released from the 3.5 billion cubic metres annual gas procurement contract to supply its gas-fired power stations in Spain, which was due to end 2029.

Under the settlement deal, these Spanish interests are being taken over by Eni.

The Damietta LNG plant had been idle since November 2012 when Egypt suffered natural gas shortages.

In addition to Damietta LNG, Egypt has a second export plant, the Idku facility operated by Royal Dutch Shell, and which has been back in commercial operation since 2017.

As regards Damietta plant shareholdings, the Naturgy 80 percent in Damietta liquefaction was transferred with Eni receiving 50 percent and 30 percent going to EGAS.

The resulting shareholding of the Damietta holding company sees Eni with 50 percent, EGAS holding 40 percent and Egyptian General Petroleum Corp. with 10 percent.

Eni has also taken over the contract for the purchase of natural gas for the plant and receives corresponding liquefaction rights.

The ruler of Sharjah, the third-largest emirate in the United Arab Emirates, has met with Claudio Descalzi, Chief Executive of the leading oil and gas exploration and production and LNG project company Eni, to take stock of progress after Eni's acquisition of the exploration rights on three onshore blocks.

Sharjah's ruler, Dr. Sultan bin Muhammad Al Qasimi who is a member of the Supreme Council of the UAE, and Descalzi discussed gas as well as other future opportunities relating to the energy transition.

Eni and Sharjah National Oil Corp. (SNOC), the state company of the emirate, recently started production from the Mahani gas and condensate field, located in Sharjah's onshore Concession Area B.

This was achieved in less than two years from the signing of the oil contract and in less than a year from the declaration of the discovery.

Eni, a shareholder in projects such as the Damietta LNG plant in Egypt set to soon come back on stream and in two Mozambique LNG projects, is also carrying out exploration activities in areas A and C of the emirate, of which Area C is largely under-explored.

“The milestones we have achieved so far with an incredible time-to-market is the result of the support of Dr. Sultan III bin Muhammad al-Qasimi and the harmonious partnership between SNOC and Eni,” said Descalzi.

“These are great achievements, particularly considering the exceptional challenges incurred during the year due to the Covid-19 pandemic,” added the Eni CEO.

The UAE is aiming to increase its natural gas resources by investing more in exploration and production in the next few years.

In the Sharjah gas field, Eni holds a 50 percent stake in the Concession Area B along with partner SNOC with the Sharjah firm acting as operator. Eni acquired Area B in a competitive bid round in January 2019.

Production from the Mahani field is sent through a new multiphase trunk line to SNOC’s Sajaa Gas Plant where it is processed utilizing the existing facilities and infrastructure.

Eni said that field production is expected to increase progressively with the connection of further wells planned to be drilled during 2021-2022.

In addition to Sharjah, Eni is also present in two other emirates, Abu Dhabi and Ras Al Khaimah, the fourth-largest of the seven emirates that make up the UAE.

Abu Dhabi is the capital of the UAE and the second-most populous city after Dubai.

Abu Dhabi holds the most oil and gas resources of all the emirates and currently produces around 5.8 million tonnes per annum of LNG at the Das Island liquefaction plant off Abu Dhabi.

The UAE also imports diminishing quantities of LNG as its domestic gas position improves.

Italian company Eni, one of the biggest energy players in Egypt, said it was trying to find an agreement to allow the restart of the idled Damietta LNG export facility, located east of Alexandria, and one of two Egyptian liquefaction facilities on the East Mediterranean coast.

Italian energy company Eni and UK major BP announced a new natural gas discovery in the “Great Nooros Area” of the Abu Madi West Development lease in the Nile Delta offshore Egypt and coupled with other finds in the block there is potential for LNG production.

Eni said that there could be more than 4 trillion cubic feet of gas in place in the Great Nooros Area where there have been other discoveries since 2015.

The latest exploration and production success for Eni is making the East Mediterranean Basin a potential world-class gas province with other nations such as Israel and Cyprus also making discoveries in recent years.

The Nile Delta Block operator Eni said the new discovery, achieved through the Nidoco NW-1 exploratory well, is located in 16 metres of water depth and is four kilometres north from the Nooros field discovered in July 2015.

The Nidoco NW-1 exploratory well discovered gas-bearing sands for a total thickness of 100 metres.

“In the Abu Madi formations a new level, which was not yet encountered in the Nooros field, has been crossed proving the high potential of the Great Nooros Area and the further extension of the gas potential to the North of the field,” explained the Italian company.

“The preliminary evaluation of the well results, considering the extension of the reservoir towards north and the dynamic behaviour of the field, together with the recent discoveries performed in the area, indicates that the Great Nooros Area gas in place can be estimated in excess of 4 Tcf,” stated Eni.

Eni said that together with its partner BP and in coordination with the Egyptian petroleum sector, it would begin screening the development options of this new discovery and available synergies with the area's existing infrastructure.

Eni holds a 75 percent stake in the license of Abu Madi West lease, while BP owns the remaining 25 percent stake.

The Italian company’s title of operator is in conjunction with Petrobel, an equal joint venture between Eni and the state company Egyptian General Petroleum Corp. (EGPC).

Eni signed a series of agreements in March 2020 with the government of Egypt and state-owned companies to re-open the nation’s Damietta LNG export plant east of Alexandria.

The plant, a joint venture called Segas, is 40 percent-owned by Eni through Union Fenosa Gas (50 percent Eni and 50 percent Naturgy).

The facility has a nameplate capacity of 5.5 million tonnes per annum of LNG, but has been idle since November 2012 when Egypt suffered natural gas shortages.

In addition to Damietta LNG, Egypt has a second export plant, the Idku facility operated by Royal Dutch Shell and which has been back in commercial operation since 2017.

Eni’s discovery of the huge Zohr gas field in the East Med in 2015 helped transform the Arab nation’s LNG and domestic gas fortunes.  

Three European energy majors and prominent LNG market participants, Total, BP and Eni have confirmed a substantial East Mediterranean natural gas discovery in the North El Hammad block located 11 kilometres offshore Egypt.

Total said that along with its partners, BP of the UK and Eni of Italy, the Bashrush well in the North El Hammad licence area encountered 102 metres net gas pay in high quality sandstones of the Abu Madi formation.

“A production test was conducted with flow rates of up to 32 million standard cubic feet of gas per day, limited by testing facilities,” said Total.

“It is estimated that future deliverability per well will be up to 100 MMscf per day, along with up to 800 barrels of condensate per day,” explained the Paris-based company.

“Future plans foresee development through tie-in to nearby existing infrastructures,” stated Total.

Kevin McLachlan, Senior Vice President Exploration at Total, said the discovery was a boost for the company, whose most prominent venture at the moment is the fully funded Mozambique LNG export project in southeast Africa,

“We are very pleased to announce this discovery in Egypt. These results support our strategy to allocate a significant share of our exploration budget to the search of hydrocarbons in the vicinity of existing infrastructures,” added McLachlan.

“These resources have low development costs since they can rapidly be tie-in and put into production,” he stated.

Total holds a working interest of 25 percent in the North El Hammad licence, alongside operator Eni with 37.5 percent and BP with 37.5 percent.

Total confirmed in July 2020 that full project financing was in place for the Mozambique LNG project using Area 1 feed-gas in the Rovuma Basin.

The joint venture companies in Mozambique have signed a $14.9-billion senior debt financing agreement proposed to construct a two-Train liquefaction plant with a total capacity of 13.1 million tonnes per annum.

Total said that the Mozambican venture represented a total post-financial investment decision outlay of $20Bln.

The Area 1 shareholding has Total as operator with a 26.5 percent participating interest alongside ENH with 15 percent.

Japan’s Mitsui & Co. owns 20 percent, India’s ONGC Videsh, Bharat PetroResources and Beas Rovuma Energy each hold 10 percent and Thailand’s PTTEP 8.5 percent.

Italy’s Eni and partners BP of the UK and French major Total have made a natural gas natural discovery in the North El Hammad block in the Mediterranean offshore Egypt, which has again become an LNG exporter because of other gas finds such as the Zohr field.