BP Invests More than $12 Billion to Double Egypt's Gas Supply

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--BP plc (NYSE:BP) (London, England) has announced plans to invest more than $12 billion in Egypt during the next five years to boost the gas supply to the local market over the next decade.

In November, BP confirmed that it had committed $240 million for two gas blocks. One is in northeast Egypt, where it will operate the block in a 50:50 equity venture with Dana Gas (ETF:71FJ.L) (Sharjah, United Arab Emirates). The other block is offshore in the country's eastern Mediterranean waters. This block will be operated by ENI SpA (NYSE:E) (Rome, Italy), in a 50:50 equity arrangement with BP.

For related information, see July 25, 2014, article - Egypt Accelerates Oil Company Payments, Encourages $10 Billion BP Gas Investment, and September 15, 2014, article - Egypt's $500 Million World Bank Loan to Give Gas Access to Poor Households.

Three years of political turmoil in Egypt since the removal of Hosni Mubarak as president has caused delays in payments to oil and gas companies, and rendered the fuel supply system unstable. Egypt's Ministry of Petroleum said in November that the outstanding $4.9 billion debt would be paid within six months, hoping that this move would encourage greater exploration activity, which would lead to increased domestic production and meet local demand for fuel. The government already has been diverting gas that was earmarked for export to the domestic market.

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