Cite unstable conditions in the Middle-East nation as the reason

The Petroleum and Natural Gas Ministry has conveyed to the Ministry of External Affairs (MEA) that the Indian consortium comprising Gujarat State Petroleum Corporation (GSPC), Hindustan Petroleum Corporation Limited (HPCL) and Oil India Limited (OIL) has ‘unanimously’ decided not to sign the concession agreement for the two offshore oil exploration blocks of South Quseir and South Sinai located in the Gulf of Suez and Red Sea in Egypt.

Citing changed circumstances and the unstable conditions prevailing in Egypt, the Petroleum Ministry has said the three companies, which were awarded the blocks in 2008 round of bidding held by Egypt, will not be signing the production sharing contracts (PSCs). In its communication to the Petroleum Ministry, the MEA had pointed out that at present GSPC and GAIL (India) were operating in Egypt.

Another Indian company was setting up a joint venture project with an Egyptian public sector undertaking E-Chem at Ein El Sukhna to establish the world’s largest polyester plant, expected to become operational later this year.

India’s assistance

In fact, it had pointed out that Egypt had already expressed its interest in seeking India’s assistance for setting up refineries in the country. Separately, the MEA said there could be opportunities for LNG imports from Egypt.

Therefore, there was urgency to wrap up the concession agreement for the South Quseir and South Sinai oil blocks, it pointed out.

However, the communication from the Petroleum Ministry clearly said: “With regard to delay in signing of the concession agreements for South Quseir and South Sinai blocks in Egypt, it is informed that the consortium of GSPC, HPCL and OIL have ‘unanimously’ decided not to sign the concession agreements for the said blocks based on techno-commercial feasibility of the project, which was re-assessed by the consortium in the changed circumstances.

They are seeking the necessary approval from their respective boards for the same”.