BP announced a sizeable gas discovery in the West Nile Delta. For BP and the world oil industry, the focus has been on the drilling in deepwater after the disaster of the Macondo well in the Gulf of Mexico. The Hodoa [“horseshoe”] discovery is about 80km northwest of Alexandria, in 1077m of water, and drilled to a depth of 6350m. It is the first discovery in the older deeper Oligocene geological structure in the West Nile Delta area. BP insists further appraisal is underway.
For Egypt, the well is vindication of its changed terms, finalised in July, that were to give BP greater incentive to develop fields. BP and other IOCs had argued that previous concession terms no longer justified the far higher production and development costs from very deep water which has been the focus of most recent exploration. Failure to reach satisfactory terms had led to a slowdown in production. This did not deter Minister of Petroleum Sameh Fahmi from declaring at every opportunity that Egypt had plentiful supplies of gas; a claim disputed not only by Egyptians suffering power cuts in the summer but foreign customers for piped gas or LNG unable to receive their contracted amounts.
For more news and expert analysis about Egypt, please see Egypt Politics & Security.
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