BP makes 'significant' gas find off the coast of Egypt

BP has announced a “significant” gas discovery in deep-water off the coast of Egypt, its first major find in more than nine months.

The company said its Hodoa discovery was in water more than 1km deep in the Mediterranean Sea, about 80km northwest of Alexandria.

As the initial gas strike in a programme to assess the potential of new geological targets in the West Nile Delta area, Hodoa is especially important.

“It’s an entire new piece of geology that looks promising,” said Robert Wine, a BP spokesman.

The discovery well, drilled to a near-record depth for the region of 6,350 metres below the seabed, was aimed at rock formations below those in which BP had previously found gasfields containing trillions of cubic feet (cu ft) of reserves.

Hodoa is about 25km north of Raven, the biggest of those, and 20km west of Taurus, another gasfield.

BP made those discoveries in 2003 and 2007 respectively. In January 2008, it announced with Italy’s Eni a third “significant” deep gas discovery, Satis, about 50km north of Damietta on Egypt’s coast.

BP has not released an estimate of Hodoa’s potential reserves. It said further appraisal of the gas deposit was under way.

“The Hodoa discovery further demonstrates the great potential of the deep reservoirs in the Nile Delta,” said Mike Daly, the BP executive vice president of exploration.

BP holds an 80 per cent interest in the West Nile Delta concession. RWE, the German utility, holds the other 20 per cent.

BP has invested more than US$17 billion (Dh62.44bn) in Egypt, making it the country’s largest foreign investor.

The company and its affiliate Suez Petroleum, a joint venture with the state-owned Egyptian General Petroleum Company (EGPC), have pumped almost 40 per cent of Egypt’s oil output to date and supplied nearly 35 per cent of its domestic gas.

If Hodoa were found to be commercially viable, it would benefit from its proximity to infrastructure such as undersea pipelines that will soon be developed to exploit the Raven field, which contains an estimated 4 trillion cu ft of gas.

In July, BP signed an agreement with Egypt’s petroleum ministry and EGPC establishing new commercial terms for exploiting deepwater gas discoveries.

Under the agreement, BP and its partners are entitled to higher prices for their output from deepwater projects than the government had previously been prepared to pay for domestic gas.

The amended concession terms reflect the higher costs and risks associated with producing gas from deepwater reserves compared with development on land or in shallow water.

Hesham Mekawi, the president and general manager of BP’s Egyptian unit, estimated in July that BP and its partners would invest $9bn in developing deepwater gas projects in the West Nile Delta that would create thousands of jobs.

“Hodoa is an important discovery which builds upon BP’s previous successes in the West Nile Delta,” Mr Mekawi said yesterday.

He said BP was committed to gas development in Egypt.

BP is in the process of divesting up to $30bn of assets worldwide to pay costs related to its huge oil spill in the Gulf of Mexico.

The asset sales to date have included stakes in onshore Egyptian oil and gas concessions. The land-based assets, unlike BP’s offshore concessions in Egypt, were not considered part of the company’s “major projects” portfolio.

tcarlisle@thenational.ae