Egypt Daily News – Egypt has reached an agreement with U.S. company ExxonMobil on new terms for the development of the “Cairo” and “Masry” areas in the Mediterranean Sea. The updated agreement includes increasing the company’s share in the two zones to up to 40% of production, compared to 15% under the previous deal, according to a government official who spoke on condition of anonymity.
At the end of last year, Egypt introduced new incentives for foreign companies to boost gas production. These included allowing the export of a portion of new production, with the revenues used to repay outstanding dues, and raising the price paid to companies for their share of new fuel production.
This year, Egypt began revising agreements with ExxonMobil and increasing production shares for companies in order to encourage faster development and exploration to meet the country’s natural gas shortfall.
The Eastern Mediterranean has become a key exploration hub in recent years, following several natural gas discoveries off the coast of Israel in 2009 and 2010.
Cost recovery
The official told Asharq that the amendments also included extending the cost recovery period to about seven years instead of five, to encourage the company to increase its investments and speed up development operations.
Egypt’s daily natural gas needs amount to 6.2 billion cubic feet, while current production has dropped to about 4.1 billion cubic feet per day. Demand is expected to reach 7 billion cubic feet per day during the summer.
Earlier ExxonMobil seeked to sell the “Nefertari-1” gas discovery in Egypt. ExxonMobil invested up to $150 million in the concession that includes the discovery in the Mediterranean Sea. The American company was seeking to sell its only gas discovery in Egypt, “Nefertari-1,” due to its limited economic viability for the company, according to two government officials who spoke on condition of anonymity.
