GPA to offer 6-year oil production concession

The state-run General Petroleum Authority (GPA) will hold the biggest international bid in its history, offering a six-year concession for oil produced by its sister company, the General Petroleum Company (GPC), starting in 2011. 

Speaking on condition of anonymity, one official GPA source said the company hoped to obtain up to US$2 billion–the highest possible amount that the GPA can make from the sale of an affiliated company’s production. The amount surpasses what was paid for Ras Gharib oil field production, which the GPA sold earlier to multinational investment house Morgan Stanley.

The source added that LE6 billion of funds raised by the sale would be given to the Finance Ministry for inclusion in the state budget for the 2009/2010 fiscal year, as promised by the Petroleum Ministry. The Petroleum Ministry gave the Finance Ministry revenues from the Abu Kir oil field concession won by Italian oil exploration company Edison.

The source also said that US$1 billion of funds raised by the sale would be earmarked for paying off the petroleum ministry’s debts to foreign partners and suppliers.

The ministry is expected to soon announce details of the bid, in which the National Bank of Egypt and Morgan Stanley are both expected to take part, along with other international banking institutions.

Banking sources say the bid represents a golden opportunity for international creditors, since loans will be guaranteed by the GPC’s daily average sale of 50,000 barrels of oil. They also point out that the GPC had increased its reserves from 355 million barrels in 2002 to 414 million barrels in 2007.

Fully owned by the GPA, the GPC is responsible for generating revenue from oil exploration concessions.

Translated from the Arabic Edition.

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