British energy giant BP unveiled plans today to invest a record USD 12 billion in Egyptian gas fields with Russian partner DEA in a "vote of confidence" for the troubled nation.
The investment -- equivalent to 11 billion euros -- will be on the West Nile Delta (WND), the company said in a statement, and comes despite concern over a surge in deadly militancy in Egypt.
The London-listed group holds a 65-per cent stake in the project, while DEA owns the remaining 35 per cent.
BP is seeking to rebalance its capital expenditure (capex) programme to combat the impact of slumping oil prices, which have slashed its profits and revenues.
"The project underlines BP's commitment to the Egyptian market and is a vote of confidence in Egypt's investment climate and economic potential," BP said in a statement.
The aim is to develop five trillion cubic feet of gas resources and 55 million barrels of condensates, with production expected to begin in 2017, it added.
BP -- which has been in Egypt for 50 years with investments totalling more than USD 25 billion -- is the biggest foreign investor in the key African energy hub.
"The WND project investment is the largest foreign direct investment in Egypt," BP Chief Executive Bob Dudley said after final agreements were signed.
"WND production is key to Egypt's energy security," he said, with BP announcing that all the gas would be fed into the national grid and would eventually double BP's supply to the domestic market.
Gas will be produced by two BP-operated offshore blocks -- North Alexandria and West Mediterranean Deepwater -- with a potential for future exploration.
"This is a critical milestone in the Egyptian oil and gas history," said Hesham Mekawi, BP North Africa regional president.
However, BP's share price dipped 0.49 per cent to 450.40 on the London stock market, as investors mulled the announcement.
"Clearly, oil majors are still willing to take on geopoliticial risk," said equities analyst Mike McCudden at online broker Interactive Investor.
"Pretty much every bit of capex carries some kind of country risk, just some more than others. And Egypt cannot be ignored.
"It is, after all, one of the biggest players in Africa, both in terms of oil and natural gas, and so highly lucrative."
Analyst Atif Latif at Guardian Stockbrokers in London forecast that investor confidence in Egypt would improve further.
