BP and ADNOC’s international energy investment company, XRG, has closed on the creation of a new joint venture (JV) and international natural gas platform, Arcius Energy, which will focus first on developing gas assets in Egypt to boost domestic gas production.
BP owns 51% of Arcius with ADNOC’s wholly owned subsidiary XRG retaining 49% in the JV which will leverage the pair’s technical capabilities and development track records to grow a competitive gas portfolio, the companies announced on 16 December.
Headquartered in Abu Dhabi, XRG is an $80-billion energy investment company focused on producing lower-carbon energy and chemicals.
Since having announced the project in February, BP has assigned Arcius to operate across two development concessions, as well as exploration agreements, including
- Shorouk (BP 10% interest), which contains the Eni-discovered Zohr gas field, operated through Belayim Petroleum (Petrobel). With gas reserves estimated at 30 Tcf, Zohr is the Eastern Mediterranean’s largest natural gas field though production is declining because of a lack of investment.
- North Damietta (BP 100% interest), which includes the producing Atoll field, is operated through Pharaonic Petroleum Company.
- North El Tabya, Bellatrix-Seti East, and North El Fayrouz exploration concession agreements.
In June BP confirmed its intent to acquire 10% of ADNOC’s planned Ruwais liquefied natural gas (LNG) project. ADNOC holds a 60% interest in Ruwais, which will feature two 4.8-mtpa liquefaction trains, giving the facility a total capacity of 9.6 mtpa when completed.
Together with its partners, BP reports that it produces about 70% of Egypt’s gas through its projects in the West and East Nile Delta. ADNOC and BP are also founding members of the Oil and Gas Decarbonization Charter launched during COP28 in Dubai.
Egypt Turns to US for LNG Imports Through 2028
Reuters reported in November that Egypt was negotiating with US companies and foreign companies with US offtake to purchase volumes of LNG over 3 to 4 years to cut Cairo’s reliance on spot market purchases.
Egypt’s state-owned gas group Egyptian Natural Gas Holding Co. (EGAS) signed a regasification service agreement on 5 December with the US energy company New Fortress Energy to lease a second floating storage and regasification unit (FSRU).
The unit will receive, store, regasify, and deliver LNG to Egypt’s national gas grid. It will have a storage capacity of 160,000 m3 of LNG and a regasification capacity of up to 750 Mcf/D (7.7 Bcm/year). It will be moored at the Sumed Port in Ain Sokhna, and operations are expected to begin in the second half of 2025.
In May, EGAS agreed with Höegh LNG to deploy the 4 Bcm/year Hoegh Galleon FSRU to be moored in Egypt from June to February 2026 when it will be redeployed to Port Kembla, Australia.
Egypt's domestic supplies fell to a 7-year low in September and are likely to drop another 22.5% by yearend 2028 while the country’s energy consumption grows by 39% over the next 10 years, Reuters reported.
A lack of investment in upstream projects has been the primary issue. Zohr, for example, has been plagued by natural depletion, water infiltration, financial issues, and security threats. However, the government plans to drill new wells starting in Q1 2025, according to independent Egyptian business media reports.
Commenting on Arcius’ activities, H.E. Dr. Sultan Ahmed Al Jaber, executive chairman of XRG, said that the JV marks “an exciting new chapter in our longstanding partnership with BP, and fully aligns with XRG’s objectives to … build a world-scale integrated gas and chemicals portfolio to meet rising global demand.”
Senior Arcius Energy leadership appointed as part of the company’s formation include ADNOC’s Naser Saif Al Yafei as chief executive officer; and from BP, Katerina Papalexdandri as chief financial officer.
Commenting also, BP’s Chief Executive Murray Auchincloss added that the XRG tie-up builds on a 50-years-long partnership between ADNOC and BP that creates “a dynamic new platform for international growth in natural gas in the region.”
