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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Iraq, Shell and Petronas award a 15 well contract to Halliburton

Iraq, Shell and Petronas has awarded Halliburton a contract to drill 15 oil wells in Iraq's Majnoon oil field, while Petrofac secured a contract to develop two new crude processing plants with a capacity of 50,000 b/d each and to rehabilitate the existing crude oil plant.

"These contracts are part of implementing the preliminary plan to develop Majnoon oilfield for the next two years," said an Iraq oil industry official.

Shell and Petronas, who signed a contract to develop Majnoon oil field earlier this year, hope that their current output of 45,000 b/d will eventually increase to 1.8 million b/d.

Petrofac was awarded a two-year contract to build and develop Iraq's oil and gas infrastructure, as well as build new storage and export turbines for the oil field.

The contracts awarded to a number of international oil companies are expected to boost Majnoon's output capacity to 12 million b/d within seven years.

Source: Reuters

For more news and expert analysis about Iraq, please see Iraq Focus.

Shell to award contract for new oil wells in Majnoon

The head of Iraq's, state owned, South Oil Co, Dhiaa Jaafar, has announced that Shell and its partner, Petronas, are in the process of awarding a deal to drill new oil wells in one of Iraq's largest oil fields, Majnoon. The field located in Basra's governance is estimated to hold up to 12.6 billion barrels of proven oil reserves.

The two groups, who partnered up to develop the field, are believed to be in talks about awarding other tenders, including engineering and construction contracts. According to several industry sources, the two groups have invited a number of well established oil companies including Halliburton, Weatherford International and Petrofac to submit bids.

The former two have an established presence in Southern Iraq, while Petrofac said that it is currently in the process of making an entry in to the country's oil industry. Shell and Petronas, who were awarded the Majoon contract, back in December, own 45 per cent and 30 per cent of the stake respectively, with the other 25 per cent belonging to Iraq's state-run Missan Oil Co.

Source: Wall Street Journal

For more news and expert analysis about Iraq, please see Iraq Focus.