Egypt will adopt a new licensing policy for its future oil and gas exploration contracts signed with foreign companies that will allow the North African country to obtain a bigger share of the production, its oil minister Osama Kamal said.
Egypt
will
adopt a new licensing policy for its future oil and gas exploration contracts
signed with foreign companies that will allow the North African country to
obtain a bigger share of the production, its oil minister Osama Kamal said.
"We have developed a new system that will be implemented in the next
licensing round," Mr. Kamal said in a video interview posted on the Al
Borsa newspaper website.
"The new system will allow
Egypt
to
increase its share of the output when production rises. The more production
rises, the more our share will rise," he said.
The new policy won't be implemented on the eight oil and gas exploration
projects in the
Mediterranean Sea
that
Egypt
awarded earlier this month for an overall minimum investment of $1.2 billion,
Mr. Kamal added.
The winning companies in the last bidding round, which include BP PLC (BP),
Italy's Eni SpA (E), Edison and IEOC, a subsidiary of Eni group, Canada's Sea
Dragon Energy (SDX.V), will drill a minimum of 18 wells and will pay $73.2
million for the licenses.
Mr. Kamal has previously said that investments in oil and gas exploration are
expected to reach $8.6 billion this year.
Egypt
has
seen its oil and gas exploration activities slowing over the past couple of
years due the continuing political and social unrest since the ousting of
former president Hosni Mubarak.
The country has been paying hefty premiums for its crude supplies due to the
weaker Egyptian pound and difficulties in securing letters of credit for its
transactions, while a shortage of state-subsided diesel has already paralyzed
transportation in many parts of the country.
The civil unrest has also led to a risky economic mix of dwindling
foreign-exchange reserves, declining tourism revenue and costly price
subsidies, economists said. To prop up the Egyptian currency, the central bank
has gone through nearly two-thirds of its foreign-currency reserves, pushing the
country to the brink of a liquidity crisis.
The Egyptian government has been negotiating with the International Monetary
Fund over a $4.8 billion loan, which analysts and investors say is critical for
the country. IMF officials left
Cairo
earlier this month without agreeing on the terms of the loan.
The subsidies are delaying an agreement with the IMF, which is demanding
Egypt
makes
progress on phasing them out.
The fund was on the verge of signing a bailout late last year, but the Egyptian
government decided the measures were too controversial at the time. In a
country already struggling with civil unrest, any cuts to fuel subsidies could
enrage Egyptians who rely daily on cheap fuel, economists say.
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