CAPITAL: Cairo

MONETARY UNIT: Pound

REFINING CAPACITY: 546,060 b/cd

OIL PRODUCTION: 875,000 b/d

OIL RESERVES: 3.8 billion bbl

GAS RESERVES: 27.6 tcf

The International Energy Agency expected Egypt`s crude oil production capacity to jump 11% from its 1995 level to 1 million b/d by 2000. NGL production capacity was to climb 83% to 110,000 b/d. Gas output gains depended on uncertain timing of Nile delta and western desert projects and implementation of export agreements.

In Nile delta action, Amoco, AGIP/IEOC, and others extended to 25 a string of gas and gas/condensate discoveries that by 1997 had grown to world scale proportions. The companies had established reserves of more than 7 tcf offshore in Miocene and Pliocene reservoirs.

BG Exploration & Production tested one gas discovery and said 3D seismic data showed several similar prospects on the Rosetta concession area in the Mediterranean.

Deminex of Germany, Union Texas Petroleum, and MOL of Hungary were awarded the North Idku concession northeast of Alexandria, one of the last open concessions in the delta.

Western desert E&D activity was heavy. Apache enlarged Kenz (formerly Salam South) oil field and planned a 3D seismic survey and more wells there.

Apache`s Wadi El Rayan-5X appraisal well confirmed a new oil field on its Qarun concession. The well flowed 1,764 b/d of 26° gravity oil through a 1-in. choke with 40 psi flowing tubing pressure. The well tapped 85 ft of net pay at 5,630-5,732 ft in Cretaceous Abu Roash G sandstone.

More delineation drilling was planned and a 366,000-acre development lease established to identify additional prospects. Early output from the field, the farthest south in Egypt`s western desert, started in mid-1997 by truck.

Apache renewed calls for a second sales pipeline to Alexandria from the western desert. The Shams-2X well tested a combined 104 MMcfd of gas and more than 1,600 b/d of condensate from four intervals.

Seagull Energy Corp. said a discovery west of the Nile River south of Cairo confirmed a new productive basin. It arranged for two more rigs to delineate the 1X well on the 6.8 million acre East Beni Suef concession. It flowed at a rate of 5,200 b/d of 42° gravity oil on a 48/64 in. choke with 269 psi FTP from a 40 ft interval of Cretaceous Kharita sand below 7,000 ft. Additional zones were prospective in the well. The field was considered the largest western desert oil find since Qarun, Apache`s 1994 discovery 75 miles north. Apache and Seagull Energy Corp. are 50-50 partners in the concession.

Gulf of Suez onshore action included signing of an agreement under which Scimitar Hydrocarbons will develop Issaran (also called Asran) heavy oil field onshore near the northern end of the gulf. It planned to run a 3D seismic survey and use steamflooding and horizontal drilling to recover 10.5-18° gravity oil in three fractured Miocene carbonates, the deepest at 760 m. Ultimate production was to be 5,000-20,000 b/d.

Along the Red Sea shore in Egypt`s eastern desert, Seagull signed a lease to develop the Wadi El Sahl discoveries on the South Hurghada concession. It started production from three wells and hoped to be trucking about 4,000 b/d of 28-30° gravity oil by yearend 1997. It anticipated more production growth.

Repsol was targeting Egypt for growing exploration. In 1996 it acquired Norsk Hydro AS`s 63.64% operating interest in the Ras Kanayes and Ras El Hekma concession areas in the western desert.

Processing activity

The Egyptian Midor group let contracts to build and operate a $1.2 billion, 100,000 b/d refinery in the tax-free zone of Alexandria. The plant will supply Egyptian and Israeli markets initially, but as much as 30% of output could move to other Mediterranean markets.

EGPC will hold a 40% interest and effectively control the refinery, which was to start up in 2000.

The plant will be connected to the Sumed (Suez-Mediterranean) oil pipeline, the oil terminal at the port of Alexandria, the regional network`s LPG storage facilities, and EGPC`s El Ameriya refinery.

Separately, Repsol was looking to set up a network of service stations in Cairo and Alexandria.

Transportation

With gas supply beginning to exceed domestic demand by a large margin, Egypt looked toward exporting gas. One plan involved sale of 350 bcf/year of Nile delta gas as LNG to Turkey`s Botas. Another plan involved the so-called Peace pipeline from the Nile delta across the Sinai and to Gaza and Israel and possibly farther north to Syria and Turkey.

Egypt and Jordan were considering construction of a 170-mile, 200 MMcfd gas pipeline across the Sinai peninsula so Egyptian gas could be supplied to Jordan. The pipeline would connect the Gulf of Suez with the Gulf of Aqaba. An exact route would be decided in technical studies. Egypt agreed to supply Jordan with 247 MMcfd of gas starting in 2001.

EGPC was committed to buy gas from producers at about 85% of the oil equivalent price, but its marketed production had tripled in the previous decade to 437.5 bcf in 1996 and was likely to rise to more than 700 bcf by 2000.