Daily News Egypt

GSPC may enter into profit sharing pact with Egypt government

23 January 2008

Kolkata/Ahmedabad:- GSPC may enter into profit-sharing agreement with the Arab Republic of Egypt in February to start oil and gas exploration in two blocks in the country.

The Gujarat-State PSU holds 50 per cent operating stakes each in North Happy (offshore) and South Diyur (onshore) blocks in Egypt. India-based Alkor Petroo Ltd (20 per cent) and Calgary-based GeoGlobal Resources (30 per cent) are two other partners in both the blocks. The consortium has already entered into a draft (or initial) profit-sharing agreement with the government of Egypt. The draft was duly approved by the Parliament of Egypt.

According to sources, GSPC and its consortium partners have recently submitted the due bank guarantees to pave way for the final PSA. “We are expecting the PSAs to be signed latest by mid February,” a GSPC official said.

GSPC has submitted a bank guarantee of $175 million from State Bank of India in support of its promised investment of an identical sum in the two blocks in next four years.

GeoGlobal Resources (GGR) recently assigned GSPC all its rights to receive a 30 per cent participating interest in the blocks in exchange for an option exercisable on or before April 30, 2008.

The company had also submitted a bank guarantee of $1.17 million, as financial commitments for conducting the first exploration phase on the two exploration blocks. Industry sources, however, believe that GGR is unlikely to quit the consortium.

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