At the close of Egypt’s Red Sea bidding round, it is clear that international oil companies see opportunity in the country, and its growth is just beginning to swell. Egypt awarded Shell, Mubadala, and Chevron exploration rights in the Red Sea. Chevron and Shell each won one block, and a third block was awarded to Shell and Mubadala.
The three concessions cover a combined 10,000sqkm, and will require a minimum investment of $326mn. The licensing round started in February, following Egypt’s gas boom in multiple regions. The Red Sea bidding round included ten exploration blocks, each approximately 3,000sqkm. Saudi Arabia has also discovered large amounts of gas in the Red Sea, and is planning to conduct feasibility studies. It will use its autonomous subsea seismic acquisition fleet for its Red Sea exploration efforts, which are expected to intensify in the next two years.
Meanwhile, oil major ExxonMobil has acquired approximately 6,900sqkm offshore Egypt in the Eastern Mediterranean for exploration activities. The acquisition mostly includes acreage in the North Marakia Offshore block, which is located approximately five miles offshore Egypt’s northern coast in the Herodotus basin. The remainder is in the North East El Amriya Offshore block in the Nile Delta.
“These awards strengthen our exploration portfolio in the Eastern Mediterranean,” said Mike Cousins, senior vice president of exploration and new ventures at ExxonMobil. “We look forward to working with the government and deploying our proven expertise and advanced technology.”
ExxonMobil will operate both blocks and hold 100% interest. Operations, including acquisition of seismic data, are scheduled to begin in 2020. “ExxonMobil has been a partner in Egypt’s growth for more than 115 years, and these awards reaffirm our commitment to pursuing high-quality opportunities in the country,” said Hesham Elamroussy, chairman and managing director of ExxonMobil Egypt.
The awards add upstream interests to ExxonMobil’s long-standing downstream presence in Egypt, where it has been a leading fuels, lubricants and specialties marketer since 1902.
Meanwhile, ENI discovered resources in the Abu Rudeis Sidri development lease in the Gulf of Suez, where operating company Petrobel, equally held by ENI and by the Egyptian General Petroleum Corporation (EGPC), drilled an appraisal well following the discovery of Sidri South.
The Sidri 36 appraisal well, drilled to assess the field continuity westward in a down dip position with respect to Sidri-23 discovery well, encountered an important hydrocarbon column in the clastic sequences of the Nubia Formation (200 meters of hydrocarbon column).
This continues ENI’s positive track record in “near field” exploration in Egypt. In a press release, ENI noted that this demonstrates how the use of new play concepts and advancements in technology has allowed the company to re-evaluate potential reserves. The well will be completed and put into production in the next few days with an expected initial flow rate of about 5,000 barrels per day. Petrobel immediately conceived a rapid development plan for the new discovery with a “fast-track” approach, leveraging on existing infrastructures in the vicinity of the well and maximizing facilities synergies; this strategy will be applied also in future activities in the Sidri area with the next delineation and development wells connected to the production in a short time. The Sidri South discovery, which is estimated to contain about 200 million barrels of oil in place, will be reassessed following these new results.
Meanwhile, Shell Egypt has announced that it will sell its onshore assets in the Western Desert as it focuses on offshore exploration and its integrated gas business in the country. “Shell is proud to have worked in Egypt for over 100 years,” said Wael Sawan, Shell’s upstream director. “We remain committed to Egypt and see our future in supporting the Government’s energy hub vision by growing Shell positions across the offshore and LNG value chain. This is where we can best leverage our expertise, deliver the strongest added value to Egypt, and optimise our portfolio to ensure the company delivers a world class investment case.”
Khaled Kacem, Shell Egypt country chair, said: “Shell companies are progressing with new offshore activities, including our West Delta Deep Marine (WDDM) Phase 9B project, which involves eight new development wells, and exploration in WDDM, for which a 2nd offshore rig has been recently mobilised, that will be followed up with exploration in Rosetta as well as the recently awarded Blocks 4 and 6”
“We anticipate the start of active engagement with potential buyers in Q4 2019. During the divestment process we remain committed to ensure continued safe and reliable operations, and will keep our stakeholders regularly informed.”
Zohr gas field, the largest in the Mediterranean, produced 11.3bn cubic metres of gas in H1 2019, 3.6 times more than it did in the same period last year, according to a statement by Rosneft. Production is being undertaken by a consortium led by ENI, which holds a 50% stake, as well as Rosneft (30%), BP (10%) and Mubadala Petroleum (10%).
By the end of 2019, gas output is expected to hit 76mn cubic metres of gas per day; it currently produced 68mn cubic metres of gas per day. Rosneft said that development of the field is “ahead of schedule,” with onshore gas treatment capacity increasing. Additionally, 11 production wells, three offshore pipelines, an offshore management platform, and all eight production trains of the gas treatment plant have been commissioned.
In early 2018, Wintershall Dea announced the start of an extensive work program in all own-operated Egyptian assets. The company is currently investing more than $500mn over three years (2018-2020), aiming to significantly boost its gas and oil production in the country.
“We look back on very active 18 months in Egypt”, said Mario Mehren, CEO of Wintershall Dea. “We have already realized a good part of the upside potential in our own-operated assets Disouq and in the Gulf of Suez. Furthermore, the West Nile Delta project is progressing towards completing the development of the five fields by end of this year. These achievements are indicative of our lasting and sustainable commitment to Egypt.
“We look forward to making further contributions to the development of the Egyptian energy sector, supporting the country on its way to become an energy hub for the region,” he added.
Wintershall Dea is currently conducting a comprehensive work program for its Disouq onshore gas development project and the offshore oil fields in the Gulf of Suez. To achieve a significant ramp-up of production from the seven gas fields in Disouq, Wintershall Dea started a re-development program. It includes the completion and connection of nine existing wells to production, the drilling, completion and connection of new development and exploratory wells and the development of a new field in the north western part.
To increase production from the mature oil fields in the Gulf of Suez, Wintershall Dea is currently carrying out a workover of existing wells, drilling side tracks and replacing existing pipelines with new ones with greater capacity. Additionally, Wintershall Dea is implementing a plan to maintain the assets integrity through an active maintenance and replacement program.
While some assets are being divested, international oil companies appear to be swarming to Egypt’s vastly untapped potential offshore and onshore, having seen the success of the giant Zohr gas field.