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British energy giant BP Plc’s ( BP - Analyst Report ) offshore Egyptian gas development – Seth – produced its first gas more than three months before schedule. Italy’s Eni SpA ( E - Analyst Report ) has a 50% interest in the Seth structure through its subsidiary International Egyptian Oil Company.
The $334 million project lies 60 kilometer offshore in the Ras El Bar concession in the East Nile Delta Mediterranean. It is in the vicinity of the existing fields –– Ha'py and Denise.
Seth is being prepared with a 6 well slot, usually unmanned platform. The gas is expected to be delivered to El Gamil gas terminal by means of the Denise pipeline. The first two wells accessing the western part of the Seth reservoir are estimated to yield 170 million cubic feet per day (MMcf/d) and excavate around 240 billion cubic feet of gas.
The success achieved by BP in the Seth structure propelled the company to speed up Phase 2 development. Two additional platform wells are intended to be used by the company to attain gas in the eastern part of the field. The output at Seth is projected to grow over 250 MMcf/d, once the wells are commissioned by the end of 2012, as scheduled.
Till date, BP’s unit in Egypt, BP Egypt, in partnership with the Gulf of Suez Petroleum Company –– BP’s joint venture company with the Egyptian General Petroleum Company –– has produced around 40% of Egypt’s total oil output. Currently, BP Egypt yields about 15% of Egypt’s total oil production.
The exploration activities in the Mediterranean offer the company new prospects with high potential, as these deepwater regions remain mostly unexplored. The West Nile Delta project deserves a special mention here, as it will provide vital gas to the local markets and help in production growth from the ongoing discoveries.
BP holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months. Longer term, we maintain a Neutral recommendation on the stock.
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