Egypt sees production from BP project in 2017

Updated 28 June 2014
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Egypt sees production from BP project in 2017

AL-ASEEL OIL FIELD, Egypt: Egypt's oil minister has said that BP's $10 billion gas project, stalled for three years, had restarted and that production would begin in 2017, a sign of progress in efforts to ease the worst energy crunch in decades.
In another move that could help improve investor confidence, Sherif Ismail also said Egypt would pay $1.5 billion of the money it owed to foreign energy companies by the end of 2014.
The minister told reporters on a visit to Al-Aseel oil field in the western desert that production at BP's North Alexandria concession would begin in 2017, with 450 million cubic feet per day initially being extracted. He said output would rise to 800 million cubic feet per day in 2018.
Those volumes would mean a significant boost to current production, which Ismail told a local newspaper this month was expected to reach 5.2 billion cubic feet (bcf) per day by the end of December.
The news comes a day after Algeria agreed to ship five cargoes of liquefied natural gas (LNG) to Egypt this year, according to a source at Algerian state energy firm Sonatrach.
The total amount of the Algerian shipments will be enough to meet around three days' worth of average daily consumption, according to Reuters calculations, enough to provide serious short-term relief to gas shortages that have resulted in regular power cuts in Egypt this year.
"Gas imports are planned for a period of the next four to five years, until energy self-sufficiency is achieved," Ismail told reporters on Thursday, referring to overall imports.
Political turmoil and violence since the 2011 revolt hit the economy hard. The government has struggled to pay foreign companies for gas and work on some major new gas projects has ground to a halt at a time when generous state subsidies are stoking growing demand.
Egypt earlier this year forecast gas production would fail to meet surging domestic demand in the next fiscal year that begins July 1, signaling more blackouts ahead.
Egypt's steadily declining gas production has been exacerbated by foreign firms' wariness about increasing investment when the government owes them money and has diverted most of the gas promised for exports to meet domestic demand.
The near-daily power cuts are forcing energy-intensive industries to close factories or sharply cut production.
BG Group's problems in Egypt have affected its LNG unit so much that it cut production forecasts for the year and served "force majeure" notices to affected buyers and lenders.
Egypt's new President Abdel Fattah El-Sissi may soon be forced to tackle challenges in the sector in order to boost production and draw back wary investors.
But given that power cuts and long lines at fuel stations have stoked public anger in recent years, he will have to act carefully when reforming the wasteful subsidies system that accounts for a quarter of government spending.
In another move that could help improve investor confidence, Ismail said Egypt would pay $1.5 billion of the money it owed to foreign energy companies by the end of 2014.
The latest government figures put Egypt's debts to foreign oil companies operating there at $5.7 billion, but officials including Ismail acknowledge that debts are mounting even as the government pays off what it owes now.


Dubai property developer Damac on hunt for land in Saudi Arabia

Hussain Sajwani
Updated 18 March 2019
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Dubai property developer Damac on hunt for land in Saudi Arabia

  • Brexit a “concern” for UK property market says Sajwani
  • Developer mulls investing “up to £500 million” on London project

LONDON: The Dubai-listed developer Damac says it is scouting for additional plots of land in Saudi Arabia, both in established cities and the Kingdom’s emerging giga-projects such as Neom.
Hussain Sajwani, chairman of Damac Properties, also said the company would look to invest up to £500 million ($660 million) on a second development in the UK, and that it is on track to deliver a record 7,000 or more units this year.
Amid a slowing property market in Dubai, Damac’s base, the developer is eying Saudi Arabia as a potential ground for expansion for its high-spec residential projects.
Damac has one development in Jeddah, and a twin-tower project in Riyadh — and Sajwani said it is looking for additional plots in the Kingdom.
“It’s a big market. It is changing, it is opening up, so we see a potential there … We are looking,” he said.
“In the Middle East, Saudi Arabia is the biggest economy … They have some very ambitious projects, like the Neom city and other large projects. We’re watching those and studying them very carefully.”
The $500 billion Neom project, which was announced in 2017, is set to be a huge economic zone with residential, commercial and tourist facilities on the Red Sea coast.
Sajwani said doing business in Saudi Arabia was “a bit more difficult or complicated” that the UAE, but said the country is opening up, citing moves to allow women to drive and reopen cinemas.
He was speaking to Arab News in Damac’s London sales office, opposite the Harrods department store in Knightsbridge. The office, kitted out in plush Versace furnishings, is selling units at Damac’s first development in the UK, the Damac Tower Nine Elms London.
The 50-storey development is in a new urban district south of the River Thames, which is also home to the US Embassy and the famous Battersea Power Station, which is being redeveloped as a residential and commercial property.
Work on Damac's tower is underway and is due to complete in late 2020 or early 2021, Sajwani said.
“We have sold more than 60 percent of the project,” he said. “It’s very mixed, we have (buyers) from the UK, from Asia, the Middle East.”
Damac’s first London project was launched in 2015, the year before the referendum on the UK exiting the EU — the result of which has had a knock-on effect on the London property market.
“Definitely Brexit has cause a lot of concern, people are not clear where the situation will go. Overall, the market has suffered because of Brexit,” Sajwani said.
“It’s going to be difficult for the coming two years at least … unless (the UK decides) to stay in the EU.”
Despite the ongoing uncertainty over Brexit, Sajwani said Damac was looking for additional plots of land in London, both in the “golden triangle” — the pricey areas of Mayfair, Belgravia and Knightsbridge, which are popular with Gulf investors — and new residential districts like Nine Elms.
Sajwani is considering an investment of “up to £500 million” on a new project in the UK capital.
“We are looking aggressively, and spending a lot of time … finding other opportunities,” he said. “Our appetite for London is there.”
Damac is also considering other international property markets for expansion, including parts of Europe and North American cities like Toronto, Boston, New York and Miami, Sajwani said.
The international drive by Damac comes, however, amid a tough property market in the developer’s home market of Dubai.
Damac in February reported that its 2018 profits fell by nearly 60 percent, with its fourth-quarter profit tumbling by 87 percent, according to Reuters calculations.
Sajwani — whose company attracted headlines for its partnership with the Trump Organization for two golf courses in Dubai — does not see any immediate recovery in the emirate’s property market, or Damac’s financial results.
“(With) the market being soft, prices being under pressure, we are part of the market — we are not going to do better than last year,” he said. “This year and next year are going to be difficult years. But it’s a great opportunity for the buyers.”
But the developer said Dubai was “very strong fundamentally,” citing factors like its advanced infrastructure, safety and security, and low taxes.
In 2018, Damac delivered over 4,100 units — a record for the company — and this year, despite the difficult market, it plans to hand over even more.
“We’re expecting north of 7,000,” Sajwani said. “This year will be another record.”