Russia’s Novatek said Thursday it had bought 50% in a concession agreement for oil and gas exploration and development of the El-Arish offshore deposit in Egypt from Tharwa Petroleum S.A.E.
The other 50% will be held by Egypt’s Tharwa Petroleum. Financial details of the deal were not disclosed. The offshore block with an area of approximately 2,300 square kilometer (888 square miles) is located along the Mediterranean coast to the north of the Sinai. Half of the block lies at depths of up to 50 meters (164 foot) with the remaining area reaching up to 500 meters (1,640 foot). The agreement provides for a minimum exploration period of four years, which will include geophysical studies and the drilling of two wells.
Under the deal, Novatek, Russia’s largest independent gas producer, can extend the exploration period to nine years if preliminary results require further study. The concession agreement provides for a 20-year development period for each commercial discovery with a possible five-year extension. “The El-Arish offshore block is the company’s first international project,” Novatek CEO Leonid Mikhelson said at the signing ceremony in Cairo. “Our participation in the concession is consistent with Novatek’s long-term strategy of expanding its resource base and geographically diversifying its core activities in order to establish a stable base for production growth.” Novatek remains a relatively small player, with only 4% of Russia’s gas production and a geographically concentrated reserve base. Gazprom holds a 19% stake in Novatek, which gives the state-controlled energy giant some influence on the company’s strategy. (rian.ru)