Egyptian drilling activity to remain high in 2010

EGYPT GENERAL PETOLEUM Corp (EGPC) is trying to secure a US$2bn debt-financing deal, extending over 58 months and to be used for export finance, from the private sector.

Banks have formed several bidding consortia, according to media reports, with EGPC understood to seek pricing of the credit below 300 basis points over the London Interbank Offered Rate (LIBOR)—significantly below a US$900-mn pre-export finance loan carrying a margin of 350 basis points over LIBOR and having a 46-month maturity, agreed only about three months ago. The previous loan used EGPC’s crude exports as security, while the new facility will be secured on naphtha exports. Meanwhile, Egypt’s oil minister, Sameh Fahmy, has said that he expects drilling in Egypt during 2010 to remain at a high level, with 520 exploratory and development oil wells being drilled in the country at a cost of about US$2bn this year and 36 exploratory and development gas wells at a cost of about US$1bn. EGPC’s ability to secure the credit facility in a timely manner and the pricing it will achieve will be significant in sending a signal about the final unfreezing of the North African—and to some extent general Middle Eastern—credit markets.
Drilling-wise, Egypt’s high targets include all kinds of oil wells on mature and developing assets throughout the country.


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