....from Ceri Powell, Vice President, Shell Exploration, Middle East...

Exploration activities for new hydrocarbon resources are essential for any company involved in the oil and gas sector. Production activities deplete discovered reserves and exploration is, of course, the main way to replenish, maintain and increase a company’s reserves.

In the world of today’s high market demand, exploration activities have become ever more important to the industry as a means to grow, and to Shell to increase its overall resource base.

In the last two years Shell’s Exploration & Production business has embarked on major global exploration campaigns and we, in Shell’s E&P business in the Middle East, are proud to say that we are playing a significant role in this drive.

‘Shell in the Middle East’ has been covering several of our exploration programmes and in this issue you will read of several exploration campaigns.

Egypt is a country with which Shell first developed a relationship in 1899 and today the Group has a substantial portfolio of interests in Egypt, including downstream sales of fuels, lubricants, chemicals, compressed natural gas and natural gas. Whilst in the upstream Shell has been exploring for, and producing, oil and gas since 1909.

In the Western Desert Shell Egypt’s joint venture partner BAPETCO [Badr El-Din Petroleum Company], a 50-50 joint venture between the Egyptian General Petroleum Corporation and Shell, has a network of gas and oil production facilities with a well-established infrastructure.

Shell recently acquired new onshore acreage in Egypt through a Farm-in Agreement with Centurion Energy Click here. Shell Egypt is also drilling new exploration wells in its existing development licences in the Badr El-Din and Obaiyed fields, as well as carrying out an extensive seismic acquisition programme backed up by new exploration drilling campaigns in its West Sitra and North East Abu Gharadig concessions. We have already had some good results and we look forward to more as operations intensify over the next year.

Offshore, Shell has previously had positive results in the NEMED [North East Mediterranean Deepwater] concession and with the arrival of a drilling ship in the fourth quarter of this year and a multi-well campaign we hope to discover sufficient quantities of gas to declare commerciality, establish an important new gas play and develop a major LNG [Liquefied Natural Gas] project.

Shell Egypt is also drilling in shallow water in its North West Damietta concession Click here and hopes are high for this acreage in the core hydrocarbon province of the Nile Delta Two countries where Shell’s exploration programmes are still in their infancies are Saudi Arabia and Libya.

In Saudi Arabia, our joint venture, which is led by Shell, is the South Rub Al-Khali Company [SRAK], in which Shell has a 40 per cent interest, and Saudi Aramco and Total each have 30 per cent shareholdings. SRAK has carried out extensive 2D seismic surveys of the most prospective areas of its two Contract Areas in the Rub Al-Khali, covering a total of 210,000 square kilometres, and this month [June] SRAK will spud its first well Click here.

This is the first time that Shell, in a joint venture or alone, has participated in the upstream sector in the Kingdom of Saudi Arabia, so this is an historical event for Shell and for those of us in Shell Exploration in the Middle East.

In Libya [see page 34], Shell has been conducting an extensive seismic acquisition programme in its 20,000 square kilometre five-block onshore concession. The data is being interpreted and initial results show some good prospects. Shell Libya is currently going through the tendering process for drilling rigs and we expect drilling to begin in early 2007.

However, whilst these exploration campaigns are new and exciting we never forget our existing and valued operations in Oman and Syria.

In Oman, through our joint venture with PDO [Petroleum Development Oman - in which Shell holds a 34 per cent shareholding], we continue to explore in both new and existing fields, and new discoveries are being made to increase both reserves and production in this historic heartland for Shell in the Middle East.

In Syria, Shell is also negotiating for new licences and expanding exploration activities.

Finally, one of the most exciting developments for Shell in the Middle East is the development of two massive integrated projects in Qatar. The Qatar GTL [Gas to Liquids] and the Qatargas 4 projects both require upstream gas production facilities of 1.4 billion standard cubic feet of gas per day, potentially making this one of Shell’s biggest operations in the region Click here.

So these are dynamic times for Shell’s Exploration business in the Middle East, and we look forward to some substantial discoveries over the next few years.