in the Egyptian western desert, totaling 3 million acres, have been
received by affiliates of Oklahoma City-based Texas International
Co. and Conoco Inc., it was reported Thursday.
Currently, the Egyptian subsidiaries of these companies are
producing 20,000 barrels of crude oil daily along with natural gas
from one 300,000-acre concession, the Khalda concession, awarded to
Texas International in 1980.
The five new exploration agreements, signed March 13 in Cairo,
require the firms to drill at least 11 wells and spend at least $27
million during the next three years to explore the three million
acres, Texas International said. Drilling operations are expected
to begin before year-end.
The concessions are east, south and southwest of the Khalda
concession, which is about 200 miles west of Alexandria, Egypt.
The Khalda concession began producing oil in late 1986.
The interest of Conoco, a subsidiary of Du Pont Co., is 58.5
percent on four of the concessions, while Texas International's
share is 6.5 percent. That brings the partners' total to 65
percent. Affiliates of Oranje Nassau and Norsk Hydro are
participating in those concessions.
On the fifth concession, Conoco has a 90 percent interest, with
Texas International holding a 10 percent carried interest.
"These agreements represent one of the largest single awards
made by the Egyptian government and are the first of a generation of
agreements to allow the contractor parties rights to develop and
share in natural gas as well as oil," said Constantine S. Nicandros,
Conoco president and chief executive officer. "The inclusion on
natural gas rights will help encourage exploration and will
facilitate development of any natural gas discovered."
In the past, the concession agreements had dealt only with oil
production, said James Gregory, director of investor relations for
Texas International. On the Khalda concession, natural gas is being
produced in concert with crude oil and is being vented and burned
off, due to a lack of natural gas pipelines and storage, he said.
The groups are negotiating with the Egyptian government for the
possible addition of a natural gas production clause into the Khalda
concession agreement, Gregory said.
Texas International is a party in the concession agreement by
virtue of an "area of mutual interest agreement" set up by the
company and Conoco in the Western Desert, Gregory said.
That agreement, signed in September 1985, stated that if Conoco
received a new concession from the Egyptian government within five
years, Conoco would offer Texas International a 10 percent carried
interest - Conoco would pay Texas International's exploration costs
for 10 percent of Conoco's interest in the concession, Gregory said. …