MOSCOW (MRC) -- Chevron and Shell have been awarded oil and gas exploration concessions in Egypt's first ever Red Sea licensing round, the country's petroleum ministry said Sunday, according to S&P Global.
Chevron was awarded Block 1 and Shell Block 2, while Block 4 was awarded jointly to Shell and the UAE's Mubadala Petroleum, the ministry said.
The three blocks cover a total exploration area of around 10,000 sq km and carry combined minimum investment commitments of USD326 million, the petroleum ministry said, adding that potential investment would rise to "several billion dollars" if discoveries were made.
Egypt was offering 10 blocks in its maiden Red Sea licensing round covering more than half of its Red Sea maritime shelf which borders with Saudi Arabia. The Chevron and Shell blocks are in the northern sector of the Red Sea and no other bid winners were announced for the remaining seven blocks.
The ministry remained upbeat over future Red Sea exploration, however, saying the interest of western oil majors "constitutes a positive and important indication of the attractive investment climate in Egypt."
"The necessary investments for exploration and development...and the lack of production facilities, indicates the eagerness of Chevron," the ministry said. "In addition to Shell, it is a good indicator...that confirms the continued expansion of the size of investments in the petroleum sector and contributes to increasing the chances of success."
In February, a 2D seismic survey in the Red Sea led by Schlumberger concluded there was a 70% chance of natural gas discoveries in the area, according to local media reports. In September, Schlumberger and TGS reimaged 3,600 sq km of legacy seismic data on the Egyptian Red Sea to support interest in the licensing round.
"The underexplored offshore Egyptian Red Sea area is made up of large, untested structures that offer exceptional growth opportunities for oil companies," TGS CEO Kristian Johansen said at the time.
Egypt's plans to explore for oil and gas in the Red Sea received a fillip in 2017 when it ratified a maritime demarcation agreement with Saudi Arabia, which saw the North African country cede sovereignty over two uninhabited Red Sea islands to Saudi Arabia.
A long-running dispute with Sudan over control over the so-called Halayeb Triangle to the south, however, continues to hang over Egypt's latest exploration drive.
In March, Sudan's oil minister Saad el-Deen el-Bushra called the Red Sea licensing round an "illegal operation" and threatened legal consequences for companies involved in the round. The Halayeb triangle, which is controlled by Egypt, has been claimed by Sudan since the 1950s.
The blocks awarded to Chevron and Shell are well outside the disputed maritime waters.
As MRC wrote before, US-based Phillips 66 remains open to developing another ethane cracker for its Chevron Phillips Chemical (CP Chem) joint venture, the refiner's CEO said in March 2018.
We also remind that in March 2018, Chevron Phillips Chemical Company LP, part of Chevron Corp, successfully introduced feedstock and commenced operations of a new ethane cracker at its Cedar Bayou facility in Baytown, Texas. At peak production, the unit will produce 1.5 million metric tons/3.3 billion lbs. per year.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,904,410 tonnes in the first eleven months of 2019, up by 6% year on year. Shipments of all PE grades increased. PE shipments increased from both domestic producers and foreign suppliers. The PP consumption in the Russian market was 1,161,830 tonnes in January-November 2019, up by 7% year on year. Deliveries of all grades of propylene polymers increased, with the homopolymer PP segment accounting for the largest increase.
Headquartered in San Ramon, California, Chevron Corporation is the the second-largest integrated energy company in the United States and among the largest corporations in the world. Chevron is involved in upstream activities including exploration and production, downstream activities including refining, marketing and transportation, and advanced energy technology. Chevron is also invested in power generation and gasification processes.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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