Sylvia Pfeifer BP marks return to deep water with Egypt gas discovery

BP marked a return to the deep water today – in Africa.

Seven months after its accident in the deep waters of the Gulf of Mexico, the UK oil group announced it has made a significant discovery in the deepwater West Nile Delta area in Egypt.

The Hodoa discovery – Hodoa means ‘horseshoe’ – is located in the West Mediterranean Deepwater, some 80km northwest of Alexandria. The WMDW-7 well was drilled to a depth of 6350m and is the first Oligocene Deep Water discovery in the West Nile Delta area.

BP holds 80 per cent of the West Mediterranean Deepwater concession with RWE Dea holding the remainder.

BP won’t say how big the potential reserves are – it says further appraisal is underway – but for the discovery to be classed as significant you would expect it to be in the 200m-250m barrel range on an oil equivalent basis, one industry analyst told me. It’s deeper than previous discoveries and is a first discovery in a new, older and deeper, geology.

BP’s shares were up 1.41 per cent on the day by early afternoon trading in London to 434.80p a share.

For Egypt, which is energy hungry, the discovery should be good news. The country has the third-largest gas reserves in Africa after Algeria and Nigeria, with 77.3 trillion cubic feet at the end of 2009 according to BP. Depending on the size of the discovery, there could also be the potential for exports.