Shell and its subsidiary British Gas (BG) have signed an agreement with the Egyptian Petroleum Ministry to acquire $400 million out of their financial dues by the end of June, in exchange for hiring a driller and resuming work in the 9B phase of the project in the Burullus fields in the Mediterranean Sea.

This is coming after BG held talks with the Egyptian General Petroleum Corporation (EGPC) to increase the price of gas.Gas from the 9B phase was priced through formula related to the price of Brent crude oil with a highest price of $5.88 and a lowest price of $2.5 per MmBTU.

According to a source, the Petroleum Minister Tarek El-Molla, during a recent meeting, vowed to pay BG’s CEO, Samy Eskandar, $400 million by June ending and complete the remaining dues by the end of 2016.BG’s debts are estimated at $1 billion and represents 30% of the $3.2 billion arrears owed to international oil companies by the government.

The source noted that the agreement aims to fast track operations and connect wells in the project by Q4 of 2017 while the whole project is expected to be concluded by H2 of 2018.

Shell has said it will not recommence operations on the project unless gas prices are set by the authorities, part of its dues have been paid by the government and it is allowed to export 100 to 150 Mmcf/d of gas from the Edco liquefaction factory belonging to BG.

The Royal Dutch Company postponed operations on the 9B phase in the Burullus field in March and the Saipem drilling rig was withdrawn from the site following the completion of operations on 9A.

Gas on the 9B site is 40% lower than that of 9A, thereby decreasing the production life of the project. Due to this, Shell demanded for an increase in the prices of gas, Daily News Egypt reports.

Anita Fatunji