Issue 128 • 14 December 2007

Ambitious plans in Egypt form core of Centurion’s strategic thinking

Centurion Petroleum Corporation plans significant investments in Egypt in 2008 with the aim of finding enough gas for LNG exports. It also hopes to expand its position in a market that has become the main lifeline for parent company Dana Gas, writes Nadine Marroushi.

Dana Gas’ Egyptian arm Centurion Petroleum Corporation is proposing to set up a “gas city” to host industries that rely on feedstock gas to bring new products to domestic and international markets.

Centurion hopes to attract producers of ceramics, rubber, carpets and plastic films to the development, which would have commercial and residential space and follow a similar model to those in the United Arab Emirates, such as Abu Dhabi Industrial City.

Centurion president Hany El-Sharkawi told African Energy: “The proposal was received with interest by the government, so now we are doing the market research."

Centurion has set up a team to target local and international companies, and to look at potential sites and costs. “It will have to be located near a coast, so we are looking at the Western Desert or Gulf of Suez,” El-Sharkawi said.
The project could cost anywhere between $500m-2bn. Companies will be chosen based on gaps in the Egyptian market. “Because Egypt has enough cement factories, these will be ruled out,” El-Sharkawi said.

The city idea was proposed in a November meeting in Cairo between Prime Minister Ahmed Nazif, Petroleum Minister Sameh Fahmy, Dana Gas executive chairman Hamid Dhiya Jafar and El-Sharkawi (AE 127/16).

Centurion is keen to get the project off the ground as soon as possible. Dana Gas has begun work on a similar project in Kurdistan, where it recently opened an office.

Drilling for more gas

Centurion has planned an aggressive exploration programme for 2008 to drill deeper targets with the aim of finding enough gas for a liquefied natural gas plant.

“We haven’t drilled deep so far, because we didn’t have access to the equipment,” El-Sharkawi said.

An order has been placed for three rigs to drill to depths over 4,000 metres. Two are expected in Q1 2008, and one in Q4 08. Drilling is scheduled to begin in February in the West Qantara concession.

These projects will significantly increase Centurion’s investment in Egypt, which has ranged from $100m-120m/yr for the last six years. It will also further the company’s goal to be among the top three gas producers in the country. Centurion says it now holds sixth place, producing 150m ft3/d or 32,000 boe, up from 12m ft3/d and 500 boe in 2001/02.

Egypt constitutes 95% of its revenue and investments, with the remainder invested in Tunisia and São Tomé e Príncipe.

Meanwhile, Centurion has received test results from the Kom Ombo concession’s El-Baraka-1 exploration well in Upper Egypt (AE 122/13). Recoverable oil is believed to be 8m bbls with production of 150-200 b/d scheduled before year-end, and the Gulf of Suez Gas Liquid Plant is due for completion in 12-18 months (AE 127/16).

Iran gas delay

Delays in Iranian gas supply to Dana Gas in Sharjah have made Egypt the main source of income for the company, El-Sharkawi told African Energy.

A long-running dispute between Dana Gas and Iran over pricing caused Dana’s profits to plummet by 40% in Q2 2007. El-Sharkawi did not comment on whether Dana Gas had increased payments to Iran for the gas, but said the contract’s terms were now fully settled and agreed upon from both sides. Iran is expected to start supplying the gas in Q1 08.

Egypt is producing 5.4bn ft3/d for domestic consumption and export, and Centurion says there is demand from both markets to increase output by around 60% in the next decade.

El-Sharkawi said he was optimistic that the government would be able to meet its commitments. “Judging by the productivity of companies in Egypt, there are very aggressive exploration programmes being conducted where gas is supposed to be found, such as in the offshore Mediterranean basin and Nile Delta – these two could yield the reserves that the government requires,” he said.