Eni Puts $12 Billion into Egypt’s Gas as Algeria Boosts US LNG Exports

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Researched by Industrial Info Resources (Sugar Land, Texas). Middle Eastern and North African countries continue to invest in developing gas resources for export to the neighboring eastern Mediterranean region, Europe and the US.

Italy’s Eni SpA (NYSE:E) (Milan, Italy), plans to invest $12 billion to develop gas production in Egypt through 2012 according a statement made by the country’s oil ministry. The country has proven gas reserves of 58.5 trillion cubic feet. The International Egyptian Oil Company, an Eni subsidiary, is the country’s leading natural gas producer and operates in the Gulf of Suez, the Nile Delta and the Western Desert. With partner Union Fenosa (MADRID:UNF) (Spain), the company is a major shareholder in Egypt’s Damietta LNG train.

Egypt’s Ministry of Petroleum has said that Eni, in its joint venture with Egyptian General Petroleum Corporation (EGPC), will increase its oil reserves in the onshore Belayim oil filed in the Gulf of Suez by 180 million barrels over the next twelve years. This increase is estimated to be worth $9 billion of which $6 billion will go to the host country. Currently Eni is estimated to produce over 500,000 barrels per day of natural gas, crude oil and condensates in Egypt.

Algeria plans to increase LNG exports to the US from the current 4 billion cubic meters to 12 billion cubic meters by 2010. State owned Sonatrach is currently producing 62 billion cubic meters of gas per annum and is targeting 85 billion cubic meters per annum in the form of natural gas and LNG by 2010.

Production capacity will be boosted by the completion of the Gassi Touil gas extraction and processing project which is under development by Repsol YPF (NYSE:REP) (Madrid, Spain) and Gas Natural (MADRID:GAS) (Spain) in the southern desert region of the country. Gas will also be processed at the Skikda complex which was destroyed by fire in 2004 and has been undergoing a rebuilding process since. The two projects will create the capacity to increase the exports to the US.

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