The Egyptian General Petroleum Corporation (EGPC) agreed with the Italian petroleum company Eni to start producing from Zohr gas field by 2017, of which the daily production capacity will reach 1bn cubic feet (bcf).
EGPC’s CEO Mohamed Al-Masry said the agreement includes increasing gas production to reach 2.7bcf per day by 2019.
EGPC held a meeting with Eni Saturday to negotiate the price of extracted gas, he said and that the price is related to a price equation with a minimum of $4 per million BTUs and a maximum of $5.88. The price will not increase beyond that limit in any case.
Al-Masry further highlighted that the company is expected to complete the seismic surveys in a year and a half. Zohr’s discovery however contributed to accelerating the companies’ research and exploration operations.
The reserves of the Zohr field, discovered in the deep water of the Mediterranean Sea, are estimated at 30tcf, and 20tcf are available for production. These reserves are higher than Cyprus’ Aphrodite field and Israel’s Leviathan field.
By the end of December, Italian Company Edison will complete the seismic survey for its concession area, which is next to the Zohr field, Al-Masry revealed.
He expects Edison will achieve a discovery in its concession area since it has virgin layers that contain large quantities of natural gas.
The company’s latest analysis indicates that Zohr will yield an internal rate of return of 25%, assuming a flat gas price of $5.88 per thousand cubic feet and recoverable reserves of 22 trillion cubic feet (tcf), justifying a fast-track development.
The company said in press statement Tuesday that GlobalData’s base case analysis assumes an initial production rate of 50 million cubic feet per day (MMCFD), consistent with other producing wells in the vicinity, and that approximately eight wells will be brought on stream annually until 2026.
The statement added that peak production would be achieved in 2026, at 3,052 MMCFD.
Matthew Jurecky, GlobalData’s Head of Oil and Gas Research and Consulting, said reduced exploration risk and the potential to share infrastructure could see the eastern Mediterranean blossom into a key development area for international oil companies.
From her part Lydia Pearson, Global Data’s Upstream Oil and Gas Analyst, said high-profile political challenges have paralysed other regional projects, such as the West Delta Deep Marine in Egypt and Leviathan in Israel, but there are reasons for other nations in the east Mediterranean to be optimistic going forward.