Total wins Egypt gas exploration license

September 30, 2014 | Egypt, Licensing & Concessions

Cairo, Egypt | – French international oil and gas supermajor, Total SA  has been awarded a licence to explore for natural gas in the Nile Delta, a source in the state-run Egyptian Natural Gas Holding company (EGAS) said on Monday. “France’s Total won the bid to explore in Sector 2 in the Delta region,” the source told Reuters on condition of anonymity.

In December, Egypt’s General Petroleum Corporation (EGPC) and Natural Gas Holding Company (EGAS) announced an international auction for oil and gas exploration concessions in accordance with production sharing agreements. The concessions are for areas in the Suez Canal, Egypt’s western desert, the Mediterranean sea and the Nile Delta.

In addition to Total, Dana Gas, BP, Eni , Petroceltic and Edison have won concessions in the Mediterranean Sea and the Nile Delta.

Germany’s RWE has won two exploration blocks in the Gulf of Suez, while Tunisia’s HBSI, Canada’s TransGlobe and Italy’s Edison secured five blocks in Egypt’s western desert.

Egypt has been struggling with soaring energy bills caused by the high subsidies it provides on fuel for its 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, which had reached more than $6 billion.

Meanwhile, Egypt aims to pay back $2 billion to $3 billion it owes to oil and gas companies by the end of the year, the oil minister said on Tuesday, as the government tries to spur new investment to boost supplies.

The Arab world’s most populous country faces its worst energy crisis in decades. Debt owed to energy companies in Egypt totalled $5.9 billion in May, the latest official figure available.

“We are paying off $1 billion to foreign partners during the next few days,” Oil Minister Sherif Ismail told a news conference in Cairo.

He said that after the Muslim Eid holiday that ends on Oct. 8, the government will issue a tender to borrow from international banks to repay more of the debt.

Gas production is steadily declining in Egypt while consumption keeps rising but firms are reluctant to increase investment after the government fell behind on payments.

It paid a first tranche of $1.5 billion to companies last December, but the debt continues to mount. Some it was incurred before the 2011 revolt that overthrew Hosni Mubarak.