Tuesday, 8 January 2013
Egypt: BG and Petronas halts ninth phase of development
BG and Petronas have announced that they have decided to halt the ninth phase of development at their Borollos project as they have not received payments from the government amounting to US$2 billion, according to a report in local Al-Mal newspaper. BG's stake of the receivables is US$1.2 billion, with the remaining US$800 million owed to Petronas, according to the report. The decision is a blow for the Egyptian authorities who are struggling to secure gas to meet the inexorably rising demand for power generation. The companies are reluctant to invest further until they are paid for gas already produced. The two firms were expected to invest around US$1.5 billion in the ninth phase starting January 2013 toeventually achieve a production target of 400 million cubic feet of LNG per day. The report also mentions that the companies have threatened to withhold payments to employees to recover their losses if the government persists in not making the due payments.
Foreign investors are still prepared to enter the energy sector in Egypt, however: RWE Dea AG announced that it had reached an agreement with INA-INDUSTRIJA NAFTE d.d. on the sale of its 50% interest of the East Yidma Concession and with Apache Mediterranean Corporation of its 35% interest in the West Mediterranean Area (Block 1) Concession.
Electricity and Energy Minister Saad Mahmoud Balbaa said that his ministry had completed the preparation of a Request for Proposals and other specifications concerning the establishment of Egypt's first nuclear power plant, Al-Masry Al-Youm reported. This is a clear sign that going nuclear, which had stop-start support under the Mubarak regime, enjoys support from theMuslim Brotherhood.
For more news and expert analysis about Egypt, please see Egypt Politics & Security.
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