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.


Oil prices jump as US crude stocks fall, Middle East worries add support

Updated 26 June 2019
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Oil prices jump as US crude stocks fall, Middle East worries add support

  • Analysts said the gains were mainly driven by American Petroleum Institute data showing a fall in US crude inventories
  • Data come as traders watched for any signs that tensions between the US and Iran could escalate into military conflict
SYDNEY: Oil prices rose more than 1 percent on Wednesday to their highest in nearly a month as industry data showed US crude stockpiles fell more than expected, underpinning a market already buoyed by worries over a potential US-Iran conflict.
Front-month Brent crude futures, international benchmark for oil, were up 1.3 percent at $65.91 by 0341 GMT. They earlier touched their highest since May 31 at $66 a barrel.
US West Texas Intermediate (WTI) crude futures were at $58.98 per barrel, up 1.8 percent from their last settlement. WTI earlier hit its strongest level since May 30 at $59.03 a barrel.
Analysts said the gains were mainly driven by American Petroleum Institute (API) data showing a fall in US crude inventories.
US crude stockpiles fell by 7.5 million barrels in the week ended June 21 to 474.5 million, compared with analyst expectations for a decline of 2.5 million barrels, the data showed. Crude stocks at US delivery hub Cushing, Oklahoma, fell by 1.3 million barrels.
“Oil prices went ballistic after the API report,” said Stephen Innes, a managing partner at Vanguard Markets.
“Oil prices have been squeezing higher on escalating tensions in the Middle East. But with late-day draws showing up in the API report, this is a strong signal for the energy market,” Innes said.
The data came as traders watched for any signs that tensions between the United States and Iran could escalate into military conflict.
US President Donald Trump threatened on Tuesday to obliterate parts of Iran if it attacked “anything American,” in a new war of words with Iran. Tehran has condemned a fresh round of US sanctions as “mentally retarded.”
Bilateral tensions between the two have spiked anew after Iran shot down a US drone last week in the Gulf. Relations have been tense since Washington blamed attacks on oil tankers just outside the Gulf in May and June on Iran, while Tehran has repeatedly said it had no role in the incidents.
Conflict between Washington and Tehran has stoked fears that shipments passing through the Strait of Hormuz — the world’s busiest oil supply route — could be disrupted.
Seeking to calm a nervous market, the head of national oil company Saudi Aramco said on Tuesday the company can meet the oil needs of customers using its spare capacity.