Abu Dhabi National Oil Co. (Adnoc) and BP P.L.C. have agreed to form a joint venture (JV) for natural gas production in Egypt, the two companies said.
The agreement involves BP contributing its stakes in three development concessions and three exploration licenses. “ADNOC will make a proportionate cash contribution which can be used for future growth opportunities”, a joint news release stated.
One of the assets, the offshore North Damietta block, contains the Atoll and Qttameya fields, which started gas production 2018 and 2020 respectively. Atoll currently produces about 300 million cubic feet per day (MMcfpd) and supplies the North African country’s power grid, BP says on its website. Qattameya, which is tied back to the Ha’py and Tuart field via a 50-kilometer (31.1 miles) pipeline and a 50-km umbilical, is expected to produce 50 MMcfpd of gas, BP said in a news release October 26, 2020, announcing startup.
BP holds a 100 percent stake in the block, located in the Nile Delta to the north of BP and Eni S.P.A.'s North El Burg and Ras El Barr license areas, through Pharaonic Petroleum Co. (PhPC), a JV with Egyptian Natural Gas Holding Co.
BP would also contribute to the JV with Adnoc its 50 percent interest in the North El Burg block, located in the shallow waters of the Mediterranean Sea between BP and Eni’s Baltim North and Ha’py areas. North El Burg has yielded four gas discoveries: Salmon, Satis, Seth South and Taurt North, according to Wood Mackenzie (WoodMac). Satis accounts for over half of reserves, the consultancy said in an asset report December 1. Operator PhPC has applied for development leases for all four after the exploration license expired June 2013, WoodMac said.
Nile Delta offshore block Shorouk, which contains what BP calls the “supergiant” Zohr gas field, is the third development lease in the JV with Adnoc. Zohr’s production reached over 2.7 billion cfpd (Bcfpd) 2019 with a potential to grow to 3.2 Bcfpd, according to a press release August 21, 2019, by Eni, the majority owner of operator Belayim Petroleum Co. (BP: 10 percent).
Located adjacent to Egypt’s maritime border with Cyprus, the field is the first deepwater Miocene carbonate discovery in the basin and is estimated to hold up to 30 trillion cubic feet of lean gas making it the biggest discovery in the Mediterranean, Woodmac said in an asset report July 19.
Besides the three development concessions, BP will also contribute to the JV with Adnoc the Bellatrix-Seti East, North El Fayrouz and North El Tabya exploration concessions.
“Today’s announcement with bp represents a significant step forward as Adnoc builds its international natural gas portfolio”, Musabbeh Al Kaabi, Adnoc executive director for low-carbon solutions and international growth, said in a statement. “This progressive joint venture partnership will enhance Egyptian energy security and the economic potential of the region’s most populous Arab country.
“Building on our long-standing strategic partnership with bp, Adnoc looks forward to continue exploring other opportunities as we collectively seek to decarbonize our operations and lead a just and equitable energy transition”.
William Lin, BP executive vice-president for regions, corporates and solutions, said, “This dynamic JV offers a platform for international growth that advances our longstanding and strategic partnership with Adnoc that spans over five decades”.
The partners expect to complete the JV formation by the end of 2024 subject to regulatory clearances.
Besides assets that would be migrated to the JV with Adnoc, BP also operates Egypt’s West Nile Delta gas development, which includes five fields. The development currently produces 1.0 Bcfpd and has an investment of about $9 billion, BP says on its website. Wintershall Dea is a partner holding the remaining 17.25 percent.
