• Exploration, infrastructure development and production of oil and gas in the Alam El Shawish East area, Western Desert

    In 2006, Naftogaz, the Arab Republic of Egypt (ARE) and the Egyptian General Petroleum Corporation (EGPC) signed a concession agreement for the exploration and exploitation of oil and gas in the Alam El Shawish East area, Western Desert, which was the first step towards practical implementation of the company's investment projects in Egypt.

    Pursuant to one of the projects, commercial production of hydrocarbons began in 2010, which led to the setting‑up of Petrosannan Company, a joint venture that provides operational management of the project under the annual work program approved by the shareholders (Naftogaz and EGPC).

    In 2016, two appraisal wells were drilled for additional exploration of reservoirs in the concession area, as a result of which new oil deposits were discovered. Accordingly, crude oil production was increased by 56 thousand barrels (7.6 thousand t) compared to 2015, and commercial production of oil and gas condensate reached 2.3 million barrels (313 thousand t) in 2016.

    By the end of 2016, 49 wells were drilled in the concession area thanks to Naftogaz investment, 38 of which revealed oil and gas accumulations.

    In total, 9,986 million barrels (1,362 million t) of commercial oil with gas condensate and 14,864 billion cubic feet (420 mcm) of gas have been produced since the beginning of exploitation of reservoirs in the concession area.

    Exploration, infrastructure development and production

    South Wadi El Mahareeth and Wadi El Mahareeth investment projects

    Investment projects are underway pursuant to concession agreements on the exploration and further development of hydrocarbon reservoirs, signed on 7 February 2012 between the Arab Republic of Egypt, Ganoub El-Wadi Holding Petroleum Company (GANOPE) and Zakordonnaftogaz, a subsidiary of Naftogaz. These agreements relate to the Wadi El Mahareeth (WM) and South Wadi El Mahareeth (SWM) blocks located in the Eastern Desert of Egypt. The project is at the stage of geological exploration.


    Fulfillment of concession conditions in 2016

    - 2D seismic prospecting and data processing (3,100 linear km) are complete;

    - The study of the low-velocity layer by means of the uphole drilling method is complete (16 uphole wells were drilled: 7 wells for the WM block and 9 wells for the SWM block);

    - Interpretation of 2D seismic prospecting data has started.

    Factors that impede the implementation of foreign projects

    - Untimely and incomplete funding of works by the Egyptian side because of a currency crisis in the country;

    - Overdue accounts payable accrued by Petrosannan Company and possible punitive sanctions on the part of contractors;

    - A lengthy procedure of approval with the Egyptian authorities, the Egyptian armed forces and GANOUB.


    Goals for 2017

    The main goals for 2017 are the stabilization of oil production based on the mechanical operation of wells and construction of oil and gas infrastructure to improve business performance. In addition, the company faces the following objectives in 2017:

    - To complete the interpretation of 2D seismic prospecting data;

    - To identify the most promising sites and locations of 4 wells in the concession blocks;

    - To construct 4 wells (2 wells in each block).

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