VIENNA/ABU DHABI: Royal Dutch Shell, RWE and TransGlobe Energy have won concessions in Egypt’s first licensing round since the 2011 revolution in a sign that international oil firms are undeterred by a payment backlog of billions of dollars.
The biggest winners were Canada’s TransGlobe with four concessions and Shell with three concessions in the western desert including one via an Egyptian joint venture, the companies said.
“We had a total of 15 blocks but we only received offers for 11 of them and so that is what ended up being awarded,” an official from the state-owned Egyptian General Petroleum Corporation which offered the blocks said.
The EGPC official, who declined to be named, had previously said a total of 25 offers were received for the various blocks. The relatively high level of interest from international firms will likely come as a relief to Egypt which in September owed at least $3bn to foreign oil firms.
Egypt is a significant gas producer, with much of the output consumed locally, and a net importer of oil. “We are continuing to invest and Egypt is continuing to find ways to make payments to us,” said Albert Gress, vice president of business development at TransGlobe Energy, on the sidelines of the North Africa Oil and Gas Summit in Vienna.
He added that the company could start producing in the new blocks in 2014. The EGPC official confirmed the TransGlobe and Shell awards and added that RWE, Apache Corp, Dana Petroleum and Greece’s Vegas were also awarded one block each.
The results for the EGPC tender come around seven months after the closing date for bids. That date had been delayed to March 29 from Jan. 30 to allow more companies to take part.
Economic turmoil since a popular uprising unseated Hosni Mubarak last year has stretched Egypt’s finances, resulting in a backlog of payments to oil producers and driving up premiums for fuel imports. But oil executives said that the backlog had started to clear, although some concerns remained.
“We are owed about $120m and $90m of that could be considered overdue. This is down about 25 percent from the worst period,” said Brian O’Cathain, Chief Executive Officer of Petroceltic International.
Reuters
