Lukoil Overseas starts drilling on Egyptian shelf

Lukoil Overseas starts exploration drilling on the North-East Geisum offshore block in Egypt in accordance with the schedule of the exploration program.

The contractor is a well-known Egyptian drilling company EDC, which owns a world-class self-elevating floating drilling rigSenusret. The contractor was selected as a result of the tender and consultations with Egyptian partners and government authorities.

The work will be carried out for two months in 35 m of water. The target well depth is 1,820 m. Approximate cost of work will be about $6 million.

The Northeast Geisum block is in the Gulf of Suez in the Red Sea near the Egyptian coast. Lukoil Overseas acquired the right to work on this block, as well as on the neighboring West Geisum block, in January 2003 based on the public tender organized by the Egyptian General Petroleum Corp. (EGPC). Lukoil Overseas and the Ministry of Petroleum of Egypt signed a concession agreement in June 2003.

The combined expected reserves of both blocks are estimated at 183.5 MMbbl of oil (maximum case). Five oil and gas prospects have been identified within the blocks. The combined area of the blocks is 175 sq km.

The exploration program for both blocks covers four years, which includes drilling of four exploration wells. The first exploration well on the West Geisum block will be spud in February 2005. The initial minimal exploration investment program is planned at $27.8 million.

Exploration operations at the West Geisum and North-East Geisum blocks will make it possible to merge the infrastructure on the blocks with that of the nearby Weem field in Hurghada, also being developed by Lukoil Overseas.

11-10-04