Two years ago when Egypt offered international companies the chance to bid for new oil and gas blocks, there was a noticeable lack of interest from some of the big operators. Development costs were soaring and, with gas sold to the domestic market capped at $2.65 per million BTU (equivalent to an oil price of $22 a barrel) at a time when crude prices were heading towards record highs, the terms were not attractive enough, experts say.
But it appears that lesson was taken on board by the government. In the past 18 months or so, Egyptian authorities have negotiated with companies, including BP, Eni and BG Group, to raise the cap on gas sold to the domestic market to about $4.75 in increments over a set period of time, experts say, depending on individual contracts.
