Shell and Eni were among the companies awarded oil exploration licenses in Egypt's latest oil and gas tender, Reuters reports, adding the two companies along with Exxon, BP, and Petronas were also awarded licenses for natural gas exploration.
The government awarded a total 12 licenses, with the minimum investment seen at between US$750 million and US$800 million.
Earlier this week, Bloomberg reported that Egypt was putting the final touches to a new type of contract aimed at incentivizing oil and gas majors to spend more on exploration in the North African country.
"We're improving the cost-recovery process to be faster, less bureaucratic and more efficient," oil minister Tarek el-Molla told Bloomberg in an interview, as Egypt pursues its ambitions in the oil and gas industry, planning to become a major natural gas exporter.
Energy companies have committed some US$10 billion to exploration in Egypt this year, but this could just be the start if the new contract terms do their job. Currently, foreign companies operating in Egypt do so under production sharing agreements that leave a third of the oil and gas produced by foreign companies in the country for them, to cover their exploration and production expenses. The rest is divided between the operators and the Egyptian government with the latter entitled to buy the companies' share at a predetermined price.
This is not optimal for international oil companies who have voiced their dissatisfaction with the PSAs more than once. Although El-Molla did not provide details about the new contracts in his interview for Bloomberg, the news outlet last year cited sources as saying part of the contract overhaul involved a stipulation allowing field operators to make their own decisions about what to do with their share of the output.
Egypt will carry out another tender for oil and gas blocks later this quarter, the oil minister also said during his interview.
By Irina Slav for Oilprice.com
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