Egypt is not among the world's oil and gas leaders in terms of prospected and proven reserves and production of hydrocarbons. Nevertheless, revenues from oil and gas sales are of primary importance to the country's economy: oil exports were 65 percent of Egypt's total national export volume in 2001-2002.
Egyptian proved reserves at the end of 2002 were 3.7 bln bbl of oil (508.2 mln tons) and 58,500 bcf of natural gas (1,660 bñm). The country's primary fields are located in the Suez Gulf region (about 60% of total reserves), the Libyan Desert, the Eastern Desert and Sinai. Oil production in 2002 was 37 mln tons
Over 20 multinational companies are already working in Egypt, including Royal Dutch/Shell, British Petroleum, ENI-Agip, ChevronTexaco, ExxonMobil, TotalFinaElf, British Gas, Norsk Hydro, Marathon, Apache, Deminex, Dover Petroleum, Dublin Oil, Novus, Repsol, LUKOIL and others.
LUKOIL in Egypt
The main LUKOIL project in Egypt is West Esch El Mallaha (WEEM, Red Sea coast).
A concession agreement on the WEEM block was reached in 1993 and commercial launch was announced in January 1998. LUKOIL currently holds a 50 percent stake in the concession. Other parties to the concession agreement are the Egyptian state petroleum company EGPC and the Government of Egypt.
Total WEEM oil production increased by 404% in 2002 to 363.8 thousand tons (compared with 72.1 thousand tons in 2001). Oil production forecast for 2003 is 535.3 thousand tons. The project has generated positive cash flow since May 2002, and income last year totaled $14 mln. Proved reserves at WEEM are 4.4 mln tons.
The second LUKOIL project in Egypt is the Meleiha field development in the Libyan Desert, carried out jointly with Italian ENI-Agip. Residual field reserves are about 3 mln tons. Field production in 2002 was 731 thousand tons. Oil production forecast for 2003 is 656 thousand tons. The LUKOIL share in the concession is currently 12%.
In July 2003 the Egyptian Ministry of Petroleum and LUKOIL signed a concession agreement on exploration of the Northeast Geisum and West Geisum off-shore blocks in the Suez Gulf.
Seven promising structures have been discovered with total area of more than 175 square km. An exploration program is planned over 4 years, including 3D seismic work and drilling of 8 exploratory wells. The minimal initial investment program for exploration is $27.8 mln.
Exploration work on these new blocks will facilitate integration of infrastructures with nearby WEEM, giving a synergy effect.