Britain's BP Amoco PLC said it has agreed with Italy's ENI SpA and Egyptian General Petroleum Corp. to build a gas-liquefaction plant in Egypt, according Dow Jones Wires.
The deal involves an investment of $1.5 billion to $2 billion, BP Amoco said in a statement quoted by Dow Jones, adding that the money will be split equally by ENI and the United Kingdom-based oil giant.
BP Amoco (BP) and ENI (E) plan to build the liquefied-natural-gas facility at the Egyptian port of Damietta, with initial exports intended for Mediterranean markets, notably Spain, Italy and Turkey. Once liquefied, though, the gas could be transported by LNG carriers even to the US, where BP has a receiving terminal and where both the demand and the price for natural gas have been rising much faster than in Europe.
Egypt has significant gas reserves in the Nile Delta where more discoveries continue to be made, said the report. It added that the export project will provide much-needed revenue, with most of the huge investment needs met by the two European oil companies.
According to BP Amoco's latest annual statistical review, a recognized industry resource, Egypt's proven gas reserves at the end of 1999 totaled one trillion cubic meters. That total was close to the 1.17 trillion cubic meters held by Norway, a major gas supplier in Western Europe.
The project will be owned 45 percent each by BP Amoco and ENI, with the remainder held by Egyptian Petroleum, Dow Jones quoted people close to talks held prior to Wednesday's announcement.
Egypt also has been negotiating gas-export projects with other major international oil companies -- such as Royal Dutch/Shell Group (RD, SC) and BG Group PLC (BRG) -- and a pipeline linking Egyptian gas fields to markets in Jordan, Syria and Lebanon is also on the drawing board.
A BP Amoco spokesperson was quotes as saying that the LNG plant alone is estimated to be worth $1.2 billion. The companies didn't disclose how much they will pay for gas for the LNG plant.
According to Dow Jones, the project involves building two LNG production trains, each with a capacity of some 4.5 billion cubic meters of gas, with the first coming online late in 2004. The second train would raise potential output to nine billion cubic feet a year over the subsequent three years – Albawaba.com
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