BG Group Operations in Egypt

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Historical overview

BG Group entered Egypt in 1995, when it was awarded shares in the Rosetta and West Delta Deep Marine (WDDM) concessions, which remain the company's main assets in Egypt.[1] Over the years Egypt has accumulated debt to BG - about US$1.2 billion by the end of the first quarter of 2013, according to Bloomberg, or US$100 million less than at the end of 2012.[2]

Current operations

BG Group is responsible for about one third of all gas produced in Egypt. The Group’s activities in Egypt center around natural gas, ranging from exploration to development and production to liquefied natural gas (LNG).[3]

The company's upstream development and production activities in Egypt are undertaken through joint operating companies. In the Rosetta concession, this is through Rashid Petroleum Company (Rashpetco), in which BG Group has a 40 percent share. In the WDDM concession, this is through Burullus Gas Company (Burullus), in which BG Group has a 25 percent share. These operating companies are 50 percent owned by the state-owned Egyptian General Petroleum Corporation (EGPC). BG Group and its partners hold the remaining 50% in each concession.[4]

Areas of upstream operation

The Group has operatorship of two gas-producing areas offshore the Nile Delta: the Rosetta Concession (in which BG Group holds an 80 percent share, with Edison holding the remaining 20 percent) and the WDDM Concession (BG Group 50 percent, Petronas 50 percent). The company also has operatorship of three other concessions offshore the Nile Delta: El Manzala Offshore (BG Group 50 percent, Dana Petroleum 50 percent), El Burg Offshore (BG Group 70 percent, Petronas 30 percent), and North Gamasa Offshore (BG Group 100 percent). BG Group also has shareholdings in the Egyptian LNG project (in Train 1 it holds a 35.5 percent share; in Train 2 it holds 38 percent).[5]

LNG

The Egyptian LNG facilities, located at Idku, in the Nile Delta about 45 kilometers northeast of Alexandria, comprise two LNG production trains. The Egyptian LNG Company owns both the LNG site and associated facilities. BG group owns a 35.5 percent stake in its sister company, the Egyptian Operating Company for Natural Gas Liquefaction Projects (Opco), which operates both trains and their facilities. BG group owns a 35.5 pecent stake in El Beheira Natural Gas Liquefaction Company, which owns Train 1, and a 38 percent stake in the Idku Natural Gas Liquefaction Company, which owns Train 2. BG Group and its partners supply Trains 1 and 2 with gas from the Simian, Sienna, Sapphire and Sequoia fields in the WDDM concession. Together, these trains have a productive capacity of 7.2 mtpa of LNG.[6]

As of May 2013, only one of the two LNG trains was operating and BG was diverting about half of the gas it produced at the West Delta Deep Marine concession into the domestic market.[7]

Recent production declines

BG Group's production in Egypt has been in decline since 2009, according to the Financial Times.[8] The Group's CEO, Chris Finlayson, told reporters in February 2013 that recent production declines were due to water breakthrough in its reservoirs, according to Platts. He said BG was planning to drill more development wells targeting an additional 2 trillion cubic feet of gas to offset the output declines, but added that production will continue to decline in Egypt until the new development wells come on stream in 2014.[9]

References

  1. "Egypt", BG group website, retrieved 8 May 2013.
  2. "BG Group Rises After Output and LNG Profit Beat Expectations", Bloomberg, 2 May 2013.
  3. "Egypt", BG group website, retrieved 8 May 2013.
  4. "Egypt", BG group website, retrieved 8 May 2013.
  5. "Egypt", BG group website, retrieved 8 May 2013.
  6. "Egypt", BG group website, retrieved 8 May 2013.
  7. "BG Group Rises After Output and LNG Profit Beat Expectations", Bloomberg, 2 May 2013.
  8. "BG Group dips on Egypt supply shortfall", Financial Times, 7 November 2012.
  9. "BG Group to miss 2015 output target on Egypt, UK woes", Platts, 5 February 2013.