UK firm BG (50% and operator) and its partner Malaysia’s Petronas (50%) have sanctioned the next $1.5bn development phase, Phase 9a, of their giant West Delta Deep Marine development offshore Egypt. This follows a payments schedule the two firms last month agreed with Cairo for revenues owed by state firm EGPC. BG was owed $1.3bn as of end-2012 of which it considers $600m “overdue” (MEES, 15 February).
BG last month said it was looking to secure guarantees as to the volumes of additional gas it will be able to export as LNG (and thus receive international prices) as part of the decision to approve Phase 9a. BG’s LNG exports have come under the spotlight given that Egypt is facing an acute gas shortage and has been looking to import LNG to cover this. Egyptian gas production fell to a 5-year low of 5.6bn cfd (58bcm/y) for February (see p20), whilst domestic demand is soaring. At 1.3bn cfd WDDM provides around a quarter of Egypt’s total gas output making the project key to Egypt’s hopes of stemming (and ultimately reversing) the decline. (CONTINUED - 297 WORDS)