EGYPT - Geology - The Nile Delta & Mediterranean.

Upper Egypt: Deep in the south-east of the Western Desert, there have been interesting oil finds in vast and mostly unexplored areas. In May 1997 Repsol made an oil discovery, Kom Ombo-1, in the southern Aswan region, Upper Egypt, which pointed to a new province of high quality oil. The find is near the pharaonic temple of Kom Ombo, 880 km south of Cairo. Beni Suef-IX found by Seagull Energy of the US in September 1997, flowed at 5,200 b/d of light oil and began producing in 1998. This is just south of the 60,000 b/d Qarun oilfield, found in 1996. Three other fields in the Qarun region found later in 1996 included one at Wadi El Rayan, south of Qarun, which flowed at the rate of 950 b/d from Abu Roash "G" formation, and SW Qarun-1X which flowed at the rate of 4,400 b/d from Kharita and Lower Bahariya formations. Bani Suef, also known as Northern Nile Basin, is believed by Meshref to have oil and gas reserves equivalent to 3 bn barrels in the Jurassic, but only 30m barrels of oil equivalent have been proven so far.

The Western Desert & Offshore: EGPC experts, including geologist Mohammed Sami Shaheen, say the deep Mediterranean Sea area off Egypt's Western Desert could potentially overtake the Nile Delta as the most prolific gas province in Egypt. There, trends extending from the Western Desert's Cretaceous and Jurassic are of major interest to foreign companies, including the majors like BP, Shell and Agip.

The Western Desert and its offshore areas already account for a major part of Egypt's 2003 gas production of 24 BCM/year and should more than double by 2017.

Shell, a top gas producer in Egypt and leading player in the Western Desert, is keen on its North-East Mediterranean Deep Marine (NEMDM) block. One of the biggest exploration blocks in the world and the deepest in offshore Egypt, this is a 41,500-square kilometre tract where water depths range from 800 to 2,800 metres and its exploration costs are estimated at US$230m. Shell has forecast MEMDM reserves at 15 TCF of gas and 4 bn barrels of oil, and has so far drilled three exploration wells, with the latest having made a major gas discovery in late 2003. Shell is to drill another two wells and has done a 7,000 sq km 3D seismic survey on the block.

The northern onshore parts of the Western Desert, so far a mainly gas-prone province, are underlain by two east-west trending sub-basins containing thick Palaeozoic to Tertiary sediments. Oil and gas discoveries have been made in both sub-basins. Cretaceous sandstones and carbonates provide the reservoirs.

Oil is sourced mostly from Jurassic shales. A Palaeozoic source similar to those of Algeria and Libya cannot be ruled out. The same source is expected in the deep marine areas off the desert. The trapping mechanism onshore is primarily structural but there is a stratigraphic component involving drape over pre-existing highs. Gas-rich Jurassic formations include the Ras Qattara and Khatatba.

Gas fields found both onshore and offshore in the Western Desert have proved to be large. Gas production there is rising rapidly, and infrastructure along the northern parts encourages further exploration in nearby areas. Major onshore gas discoveries have been made there in the past seven years by Repsol (taken over by Apache of the US in Khalda concession and other blocks), Shell and others.

The giant Cretaceous/Jurassic Abu Al Gharadiq gas fields have been estimated by Wafik Meshref to contain 10 bn barrels of oil equivalent, of which 1.5 bn barrels of oil equivalent have been proven and the remaining proven reserves by end-1998 were put at 1.04 bn barrels of oil equivalent. Cumulative production there by end-1998 had reached 460m barrels of oil equivalent.

In Khalda, in the north-west of the Western Desert, Apache has made a number of gas discoveries and most of the gas/condensate finds have flowed from Ras Qattara and Khatatba formations. Khalda has important oilfields which, together with fields in other blocks, have made Apache the biggest oil producer in the Western Desert and the third largest oil producer in Egypt (see Part 2 in next week's Review).

In the Alamein region, south-west of El Hamra terminal, two trends of oil and gas fields can become important: the Alamein-Razzak trend of fields already discovered, and the parallel Alamein West Structural Ridge, where Apache has identified many prospects. Meshref has estimated that the Alamein region contains about 7 bn barrels of oil equivalent of Jurassic oil and gas, of which 500m barrels oe have been proven, with the first discovery there having begun production in 1968.

The Faghur Basin, a non-producing region of the Western Desert, is said by Meshref to contain 2 bn barrels of recoverable oil and gas in the Palaeozoic.

North El Mesaha Trough, a frontier area in the far south-west of Egypt, is said to contain hydrocarbons. No interest has been expressed in this area so far as there is no infrastructure and EGPC has not provided all the necessary data. The area is available to any qualified company willing to carry out geological and geophysical studies on the area in the first phase.

On Feb. 17, 2003, the foreign ministers of Egypt and Cyprus signed an agreement delineating their maritime borders in a move likely to boost oil and gas exploration in the offshore area.

Reserves: Egypt's proven reserves are still estimated at 3.7 bn barrels of oil and 60 TCF of gas. In early 2000, Petroleum Minister Sameh Fahmi said reports submitted to EGPC at end-1999 suggested that proven reserves could be revised to 8.2 bn barrels of oil and 120 TCF of gas.

The E&P Offers & Exploration: A big number of blocks have been offered since 1998 (see background in Vol. 58). To speed up the bidding process and awards, new blocks will be offered every three to six months by three authorities under the Petroleum Ministry: EGPC for oil E&P; Egyptian Natural Gas Holding Co. (Egas), created in August 2001, in charge of gas E&P; and Ganoub El-Wadi Petroleum Co. (Ganope), set up in 2003, in charge of all upstream and downstream developments in Upper Egypt.

To improve its offerings, EGPC has enlarged the size of blocks and extended the exploration period from seven to eight-ten years. In very important and large Mediterranean blocks for gas, the exploration period can be 12 years, as in the case of Shell's NEMDM block. The Ministry in recent years lowered signature bonuses by half. But in late 2003 it was hinting at higher bonuses and a revision of terms in the production sharing agreements (PSA), which discouraged several companies.

There are over 265 E&P agreements and farm-in arrangements involved for oil and gas exploration in Egypt, compared to less than 200 in 1995. With the help of foreign companies operating under these agreements, EGPC has become a trend-setter in offering attractive E&P terms. But some of the foreign companies have only gained good terms after having pressed their demands hard on the Egyptian decision makers.