Moscow, Sep 29 (UNI) Russia's second largest gas producer after Gazpom, Novatek has acquired a 50 per cent interest in the concession agreement for oil and gas exploration at the El-Arish offshore block in Egypt from Tharwa Petroleum SAE.
The remaining 50 per cent will be retained by Tharwa Petroleum SAE.
As per the agreement, the company will able to survey the field for four years, with an option to prolong its exploration and drilling operations there to nine years.
The concession contract stipulates a 20-year development period for each commercial discovery, and its possible extension by five years.
The offshore block covers an area of about 2,300 square kilometers (about 888 square miles) and is located along the Mediterranean coast and is adjacent to the northern coast of the Sinai.
Half of the block lies at depths of up to 50 meters, with the remaining area reaching depths of up to 500 meters.
''The project's success would determine the future of the company in Egypt, and beyond Russia's borders in general,'' Novatek spokesman Mikhail Lozovoi was quoted as saying by RIA Novosti.
Ms Natalia Milchakova, Chief Analyst at the Otkrytiye financial corporation, said gas could be supplied to south Europe via a gas pipeline running across Jordan.
She said that Novatek's foray into the Egyptian market is a pilot project for both partners, whose results would be used to gauge the effectiveness of such cooperation.
''If the project is a success, larger players could emerge on the market, such as Gazprom, which holds about 20 per cent stake in Novatek, and Egyptian Natural Gas Holding Company (EGAS), the country's monopoly gas exporter.'' They signed a memorandum of understanding in 2005 but have not announced any projects since then.