Issuu

January 2007

Issue 1

Nuclear: The future of Egyptian energy page 14 Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy page 16

Time to reflect

page 17

Published by Egypt Oil and Gas S.A.E The Far East and Near East are meeting somewhere in the middle

20 pages

“Halliburton is above the competition”

Scenario: Iran The consequences of a potential U.S. war against Iran. Will occupation become a means for a specific end: oil?

Halliburton’s Egypt Area Manager, Hesham Ismail, spoke about the company’s achievements this year and their aspirations for 2007 page 10

This feature explores the motivation behind the SinoEgyptian rig agreement page 8

page 12

Renovations made to GUPCO sites will add more production to reserves. What scientists predicted to be the production rate of petroleum in the Gulf of Suez in the 1960s has proved to be much more. By Osama Ahmed

work. The task is scheduled to take at least two years, with over 100 platforms as well as more than 200 pipelines, totaling 3,000 kilometers, to be worked on. ENPPI’s services will include basic and detailed engineering, procurement services, construction, commissioning and start-up and overall management. This essentially means the rehabilitation of GUPCO’s offshore and onshore facilities. The facilities will not only be renewed, but also improved on with additions. GUPCO plans to create four more pipelines in the Gulf in order to increase production by 15,000 barrels of oil. continued on page 7

THE Gulf of Suez Petroleum Company (GUPCO) is a 50/50 joint venture between British Petroleum (BP) and Egyptian General Petroleum Corporation (EGPC), which is the regulatory body delegated with the task of carrying out joint exploration and production schemes with multinational entities. GUPCO was created in Egypt in 1965 and started its production with Morgan oil field in 1967. The company operates in several areas across Egypt, but the Gulf of Suez is by far its main focus of attention. GUPCO’s 40-year concession agreement ended in 2005, but on May 10, 2005 Egypt’s Minister of Petroleum, Eng. Sameh Fahmy, and BP Egypt’s President and General Manager Hesham Mekawi, signed another agreement to extend the merged concession agreement by 20 years. Revamping GUPCO Since the signing of the concession extension, the company has decided to dedicate $1.4 billion to implementing major renovations and to eventually wholly upgrade its existing facilities. Of the total, $600 million will be allocated to renovating the infrastructure of the fields, while $800 million will go towards the development of new discoveries. Twenty-five manned vessels have been sent out to repair and renovate the company’s wells and pipelines. The state-owned contractors, ENPPI and Petrojet, will be conducting the engineering, construction and installation

Centurion receives $12 per-share offer

CENTURION Energy International Inc. has entered into an arrangement agreement whereby a wholly owned subsidiary of Dana Gas PJSC will pay $12 in cash for each outstanding common share of Centurion. The total value of this transaction is approximately $1.5 billion. The offer represents a premium of 55.9% based on the weighted average closing price of the shares on the Toronto Stock Exchange for the 20 consecutive trading days prior to Oct. 30, 2006, the day prior to the date that Centurion announced that it was in discussions with a party about a possible transaction. A special committee of the boards of directors of both Centurion and Dana Gas has approved the terms of agreements and recommended that Centurion’s shareholders accept Dana Gas’s offer. UBS Securities Canada Inc., the financial advisor to Centurion has indicated that the transaction is fair, from a financial point of view, to the Centurion shareholders. UBS and BNP Paribas have each provided advisory services to Centurion in connection with the transaction. The transaction is to be carried out by way of a statutory plan of arrangement. It will be subject to the approval of 66-2/3 per cent of the votes cast by Centurion security holders at a meeting expected to be held in mid-January 2007. Closing is subject to certain other conditions, including court and regulatory approvals. The agreement includes customary provisions prohibiting Centurion from soliciting any other acquisition proposal, but allows its board of directors to accept and recommend a superior proposal in accordance with its fiduciary duties. In such cases, Centurion will be required to pay a termination fee of $34.75 million to Dana Gas. The proposed transaction is expected to close in early January, 2007.

WITH the participation of petroleum ministers, ambassadors and senior officials from different oil and gas exporting and importing countries, the first Global Energy Round Table was held in Cairo from the period between November 30 to December 1. The event was held upon the initiative of Egyptian Minister of Petroleum Sameh Fahmy during the Organization of Petroleum Exporting Countries (OPEC) meeting last March. The objective of this important gathering is to establish a framework agreement on price and supply to be fixed for five year periods to allow increased visibility to consumers and producers. During the round table sessions, ministers highlighted the importance of dialogue between energy producers and consumers, discussing the challenges facing the oil and gas industries to develop a realistic and balanced vision of the future. Also, the speakers shed the light on some of the reasons behind the current oil and gas market’s instability and discussed the importance of balanced prices acceptable to all parties in order to maintain stable energy markets in the future. Fahmy expressed Egypt’s willingness to host the next Global Energy Dialogue co-organized by the EU Energy Commission.