UPDATE: BP Gets Vote Of Confidence From Egypt Deep Water Deal

19th Jul 2010 11:12

(Adds analyst comment.) LONDON (Dow Jones)--BP PLC (BP) said Monday it has signed a new agreement in Egypt to develop significant gas resources in two deep water blocks--a badly needed vote of confidence in the U.K. company whose reputation has been damaged by the deep water oil spill in the Gulf of Mexico. "BP and the Egyptian General Petroleum Corporation have a long-standing and successful partnership, and the agreement we signed today takes that to a new level in developing these deep-water resources, as well as creating an important source of future growth for BP," said BP Chief Executive Tony Hayward. "Production from the West Nile Delta development is projected to reach up to 1 billion cubic feet per day, providing a major new source of gas for the domestic market in Egypt," said BP in a statement. BP will use subsea infrastructure and a new purpose-built onshore gas plant on Egypt's Mediterranean coast to develop the fields, BP said. First gas is expected in late 2014. The oil and gas exploration arm of German utility RWE AG (RWE.XE) has a minority share of 40% in the North Alexandria block and 20% in the West Mediterranean Deepwater block. The total investment in the project will be $9 billion split between the companies according to the size of their ownership, said Hesham Mekawi, president of BP Egypt. The deal is positive for BP as it struggles to rebuild its reputation, said NCB Stockbrokers analyst Peter Hutton. "It shows it's business as normal elsewhere in the world and other areas are still signing them to do deep water," he said. The authorities in Libya, BP's other core area of operation in North Africa, has also voiced support for the company, he said. BP has been in Egypt for almost 50 years and fields it operates supply 35% of domestic gas demand. BP is the largest single foreign investor in Egypt. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires July 19, 2010 06:12 ET (10:12 GMT)