Total and Dana Gas have been awarded licences to explore for natural gas in the Nile Delta as part of 2014 Egyptian Natural Gas Holding company (EGAS) bidding round held recently in Egypt, the state-run firm said
According to an EGAS source, Total won the bid to explore in Sector 2 in the region and Dana Gas’ wholly-owned subsidiary Dana Gas Egypt has been awarded the North El Salhiya (Block 1) and El Matariya (Block 3) onshore concessions in the delta.
In December last year, Egypt’s General Petroleum Corporation (EGPC) and had announced an international auction for oil and gas exploration concessions in accordance with production sharing agreements.
The concessions are for areas in the Suez Canal, Western Desert, Mediterranean Sea and the Nile Delta, Reuters reported.
Dana Gas Egypt will operate the Block 1 concession area on a 100 per cent basis whereas it will handle Block 3 concession area on a 50 per cent basis with BP as partner and operator. Under the terms of the agreement, BP will fund all of the cost, including Dana Gas’ share, of one exploration well up to an agreed maximum limit. In the event that the well proves commercial, BP has the option to back into 50 per cent of the deep potential of Dana Gas’ adjacent development leases.
According to the UAE explorer, BP also has the option to back into 50 per cent of the deep potential of Dana Gas Egypt’s other development leases and Block 1 concession area by drilling and funding all of the costs of a second exploration well in either the development leases or Block 1 up to an agreed maximum limit.
Patrick Allman-Ward, CEO, Dana Gas, said, “We are pleased to have been awarded these two new blocks. The area is particularly well-known to Dana Gas, given its long-term commitment to the Nile Delta. We believe there is significant upside potential from continued exploration and development in these concessions. We are delighted to be partnering with BP, a leader in deep well drilling in the Nile Delta. This will allow us to carry out a challenging work program with a proven partner and reaffirms our confidence in the potential of our assets.”
Dana Gas’ two blocks are located adjacent to the company’s existing development leases. Together with BP, it may also explore the multi-TCF gas potential of the Oligocene reservoirs that have proven successful to date in the offshore and extend into Dana Gas Egypt’s existing development licenses. The first Oligocene exploration well is scheduled to be drilled in 2016.
In case of exploration success, an early development system is envisaged to allow rapid production of the wells located close to the existing El Wastani plant.
The two blocks have a six-year exploration period, comprised of two phases of three years each. A 20-year development lease period will be granted to each block, based on approved commercial discovery. The two concessions, which cover 1,527 sq km and 960 sq km respectively, were awarded as part of the EGAS international bid round in August 2014.
Ratification of the two new concessions is expected to take place following the completion of the necessary approvals.
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