Egyptian government opens gas price talks

CAIRO, October 22, 2014 – In an effort to spur further gas development, the Ministry of Petroleum has decided to open up negotiations for the price paid by the Egyptian Natural Gas Holding Company for gas produced in Egypt.

The current going rate for gas production, excluding deepwater initiatives, has been about $2.65 per per million British thermal units for the past 14 years. The low fixed price has prevented additional offshore and unconventional gas reserves from being developed economically, since the cost of production itself may vary between $3-5 depending on the reservoir structure and operating conditions of the wells.

Factors affecting the pricing agreements, which will be negotiated on a case-by-case basis, include the need to build processing infrastructure and the layer or depth from which gas is extracted.

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