BP today announced that it has agreed to buy from Eni a 10% interest in the Shorouk concession offshore Egypt, which contains the super-giant Zohr gas field, for $375 million.
On closing, BP will also reimburse Eni for BP’s share of past expenditure.
As part of the agreement, BP also has an option before the end of 2017 to buy a further 5% interest in the concession under the same terms.
Bob Dudley, BP group chief executive, said: “This interest in a truly world-scale asset will complement our existing Egyptian business. We already have a strong partnership with Eni in Egypt and look forward to working closely with them to efficiently bring these important resources to the Egyptian market.
“BP has now been in Egypt for over 50 years and we continue to see opportunities to further develop our extensive activities here. Beyond Zohr, the first phase of our major West Nile Delta project is on schedule to begin production next year and the fast-tracked development of the Atoll gas field is expected to come on stream in 2018.”
The Zohr field was discovered by Eni in August 2015; six wells have so far been successfully drilled on the field. The field is located in the Mediterranean Sea, approximately 190 kilometres north of Port Said in waters approximately 1,500m deep. Thought to be the largest gas discovery made in the Mediterranean, Eni has estimated total gas resources in place in Zohr to be approximately 30 trillion cubic feet of gas. The first phase of development of Zohr is now being fast-tracked, with first gas currently expected in late 2017.
Eni is the operator and currently has a 100% interest in the Shorouk concession. The purchase, which is subject to receiving approvals from the relevant Egyptian Government authorities, is currently expected to complete in the second quarter of 2017.
BP press office, London: +44 (0)20 7496 4708, email@example.com
BP’s business in Egypt stretches back over 50 years. Total investments of approximately $30 billion make BP one of the largest foreign investors in the country. In Egypt, BP’s business is primarily in oil and gas exploration and production.
To date, BP Egypt, in collaboration with the Gulf of Suez Petroleum Company (GUPCO), BP’s joint venture company with the Egyptian General Petroleum Company (EGPC), has produced almost 40% of Egypt’s entire oil production, and currently produces almost 10% of Egypt’s annual oil and condensate.
Through joint ventures with EGPC/EGAS and IEOC (Eni), the Pharaonic Petroleum Company (PhPC) and Petrobel, BP also currently produces close to 40% of Egypt's total natural gas.
BP operates the West Nile Delta project which involves the development of 5 trillion cubic feet of gas resources and 55 million barrels of condensates. Production is expected to be around 1.2 billion cubic feet a day (bcf/d) - equivalent to about 30% of Egypt’s current gas production - which will supply the country’s national gas grid. Production is expected to start in 2017.
BP has made a series of discoveries in Egypt in recent years including Taurt North, Seth South and Salmon and Rahamat, Satis, Hodoa, Notus, Salamat and Atoll. In June 2016 BP approved the fast-track development of the Atoll Phase One project, expected to begin production in 2018.
BP also has interests in Egypt in a natural gas liquids (NGL) plant and in the downstream sector through the Natural Gas Vehicles Company.
In order to utilize the ‘safe harbor’ provisions of the United States Private Securities Litigation Reform Act of 1995 (the ‘PSLRA’), BP is providing the following cautionary statement. This press release contains certain forward-looking statements concerning BP’s purchase of 10% interest in Egypt’s Zohr gas field, including expected payments and options, BP’s plans to work with partner Eni in Egypt, conditions to completion and the timing thereof and estimated resources in place in Zohr and the timing of first gas; plans and expectations with regard to the West Nile Delta project and expected timing and production levels; expectations regarding BP’s contribution to future gas supply in Egypt; and plans and expectations with regard to the Atoll Phase One project and timing thereof. Actual results may differ from those expressed in such statements, depending on a variety of factors including changes in public expectations and other changes to business conditions; the timing, quantum and nature of divestments; the receipt of relevant third-party and/or regulatory approvals; future levels of industry product supply; demand and pricing; OPEC quota restrictions; PSA effects; operational problems; regulatory or legal actions; economic and financial conditions generally or in various countries and regions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; exchange rate fluctuations; development and use of new technology; the success or otherwise of partnering; the actions of competitors, trading partners and others; natural disasters and adverse weather conditions; changes in public expectations and other changes to business conditions; wars and acts of terrorism, cyber-attacks or sabotage; and other factors discussed under “Principal risks and uncertainties” in our Stock Exchange Announcement for the period ended 30 June 2016 and under "Risk factors" in our Annual Report and Form 20-F 2015.
This press release contains references to non-proved resources and production outlooks based on non-proved resources that the SEC's rules prohibit us from including in our filings with the SEC. U.S. investors are urged to consider closely the disclosures in our Form 20-F, SEC File No. 1-06262. This form is available on our website at www.bp.com. You can also obtain this form from the SEC by calling 1-800-SEC-0330 or by logging on to their website at www.sec.gov.