Cairo, Egypt | – Egypt has extended the bidding deadline to July 3 in an international auction of 22 concessions for oil and gas exploration, an official with the state-owned gas company said on Wednesday.
The previous deadline for companies to submit bids for concessions in the Suez Canal, Egypt’s western desert, the Mediterranean sea and the Nile Delta had been May 19. Egypt’s General Petroleum Corporation (EGPC) and state-owned Natural Gas Holding Company (EGAS) did not give a reason for the delay, but an EGAS source said the deadline was pushed back at the request of companies who wanted more time for feasibility studies.
“A group of companies submitted a request to EGAS and EGPC two weeks ago to postpone the closing date of the bidding so they can assess the feasibility studies for the concession areas and offer the best deals,” the source said.
Oil companies have been hesitant to develop untapped gas finds in Egyptian waters, partly because the amount the government pays them barely covers their investment costs. Egypt currently pays offshore gas producers on average around $2-$3 per million British thermal units, according to industry estimates.
Comparable payments for gas in Britain are currently above $10 and for Asian supply above $17. The government has been struggling with soaring energy bills caused by the high subsidies it provides on fuel for the population of 85 million.
The subsidies have turned the country from a net energy exporter into a net importer over the last few years. Egypt has started repaying some of its debt to foreign oil companies, but its arrears still rose to $5.7 billion by the end of March, up $800 million from the government’s last reported figure in December.