The Board of the National Joint-Stock Company “Naftogaz of Ukraine” has approved the Working Program of exploration and development of Alam El Shawish East block in Egypt

The Board of the National Joint-Stock Company “Naftogaz of Ukraine” has approved the Working Program of exploration and development of Alam El Shawish East block in the Western desert of Egypt. The Working Program was elaborated and approved after the signing of Concession Agreement between the Arabic Republic of Egypt. NJSC “Naftogaz of Ukraine” and General Oil Corporation of Egypt about search, exploration and development of oil and gas fields on the Eastern territory of Alam El Shawish, on December 13, 2006.

According to the results of executed works which have been planned, input data shall be prepared for composition of projects of construction of exploration boreholes and structures for search drilling with perspective oil resources in the amount of 359.4 million tons.

Conclusion of the Agreement and current approval of the Working Program is a great success of the NJSC “Naftogaz of Ukraine” which has won in the open international tender on exploration and development of oil and gas fields for the first time, having competed against the world leaders of oil and gas industry, namely “Arabian” (Saudi Arabia), “Apache” (USA), “Santos” (Australia) and “Sipetrol” (Chile).

NJSC “Naftogaz of Ukraine” is implementing the project of carbohydrate extraction in the Arabic Republic of Egypt in the frameworks of the state program of diversification of carbohydrate sources which are supplied to Ukraine. The project is a unique possibility for Ukraine to enter the segment of oil and gas mining in the Northern Africa with a perspective of implementing similar projects in other countries of the said region.

For information: On December 13, 2006, in Cairo, the signing of Concession Agreement took place between the Arabic Republic of Egypt, NJSC “Naftogaz of Ukraine” and General Oil Corporation of Egypt on search, exploration and development of oil and gas fields on the eastern territory of Alam El Shawish East in the Western desert of Egypt.

The agreement was signed by the Minister of Oil of the Arabic Republic of Egypt, the Head of the General Oil Corporation of Egypt and the Head of the Board of NJSC “Naftogaz of Ukraine”. The agreement was signed according to the results of tender on elaboration of respective block announced by the Government of the Arabic Republic of Egypt at the end of 2004, won by NJSC “Naftogaz of Ukraine”.

The total area of Alam El Shawish East block is over 900 square km. The term of validity of the Concession Agreement is 27 years, including the period of the initial exploration – 3 years. The calculated period of project payback is 5.5 years.

According to the Concession Agreement, within the 3-year term of exploration period, NJSC “Naftogaz of Ukraine” shall act as the Contractor of search and exploration of oil fields on the territory of Alam El Shawish East block. Investments of NJSC “Naftogaz of Ukraine” into the search of carbohydrate fields on the territory of the block shall be no less than USD 20.2 million.

Extractive resources of oil of Alam El Shawish East block contain no less than 73.5 million tons (C-3 category) according to the evaluation of subsidiary “Naukanaftogaz” confirmed by the conclusion of the State Commission of Ukraine for stocks, which is 90% of resource base of Ukrainian dry land.

There is a developed infrastructure in the block region (oil and gas pipe networks, aggregates of primary preparation of oil and gas) with an exit to the Mediterranean sea coast. Active oil fields are located not far from the specified block.

Chronology of Project in the Arabic Republic of Egypt:

13.01.05. The Board of the NJSC “Naftogaz of Ukraine” under the management of Yurii Boyko made a decision on participation of the Company in the II round of the International tender on development and extraction of oil and gas (Alam El-Shawish East block) in Egypt.

09.06.05. NJSC “Naftogaz of Ukraine” is the winner of the II round of the International tender on search, exploration and development of oil and gas fields in Alam El Shawish East (block 2) on terms of Concession Agreement concluded between the Arabic Republic of Egypt, General Oil Corporation of Egypt and NJSC “Naftogaz of Ukraine”.

30.05.06. The Parliament of Egypt approved Law No.70 “On Granting Authorities to the Minister of Oil to sign Concession Agreement with the General Oil Corporation of Egypt and NJSC “Naftogaz of Ukraine” on oil exploration and use on the Eastern territory of Alam El Shawish”.

29.06.06. Subsidiary “Naukanaftogaz” completed the re-interpretation of geographic and physical data of Alam El Shawish East block and specification of resource base. According to the evaluation of subsidiary “Naukanaftogaz”, the extractive resources of oil on the territory of Alam El Shawish East are over 73 million tons. The data of subsidiary “Naukanaftogaz” are confirmed by the conclusion of the State Commission of Ukraine for stocks.

13.12.06. The agreement on search, exploration and development of oil and gas fields on the Eastern territory of Alam El Shawish East on terms of Concession was signed in Cairo.

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