Texas International Units Given Exploration Rights / to 5 Egypt Concessions
Robinson, Robin, THE JOURNAL RECORD
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. …