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.

The Government of Cyprus said it was in alignment with US major Chevron Corp. on the imminent development of the Aphrodite natural gas field in the Eastern Mediterranean, the new regional natural gas and LNG hub despite security concerns over the ongoing conflict.

NewMed Energy, the Israeli natural gas company and LNG project developer in the East Mediterranean, said plans for the Aphrodite gas field offshore Cyprus are now focused on transportation of the gas by a pipeline to LNG processing facilities in Egypt.

NewMed Energy, a stakeholder with US major Chevron in the large Leviathan natural gas field offshore Israeli, has approved budgets for 2023 including gas field development to provide feed gas for a floating LNG project.

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.

French major TotalEnergies reported a 43 percent increase in third-quarter net profits to $6.6 billion, driven by its liquefied natural gas business even with taking a $3Bln hit over Russian assets and temporary problems affecting supplies from liquefaction plants in Egypt, Nigeria, Australia and the US.

US LNG engineering company Bechtel was awarded a front-end engineering and design contract to study a proposed unified system between the onshore gas processing plant of the West Delta Deep Marine gas fields in the Mediterranean offshore Egypt and the LNG export plant located at Idku east of the Egyptian port of Alexandria.

Egyptian Natural Gas Holding Company (EGAS), the state owner of the Arab nation’s natural gas assets, and Kanfer Shipping, the Norway-based company focusing on small-scale LNG sea transportation and LNG bunkering, said they had formed a joint venture to re-fuel ships transiting the Suez Canal.

Egypt has signed an agreement to increase natural gas production and LNG exports from its two liquefaction plants east of Alexandria to European customers and specifically Italy.

Delek Drilling, a partner in the Leviathan natural gas field, said the joint venture was finalizing a set of agreements allowing the supply of pipeline natural gas to Egypt via Jordan, using the Israeli transmission system to Jordan and the system connecting Jordan and Egypt in the area of Aqaba-Taba.