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BP signs $12B deal to develop Egypt gas field

BP said in a statement that the investment is "a vote of confidence in Egypt's investment climate."

CAIRO (AP) — The U.K.-based energy company BP on Friday announced agreements worth $12 billion to develop a major gas field in Egypt, which has been trying to attract foreign investment after four years of unrest.

BP said in a statement that the investment is "a vote of confidence in Egypt's investment climate."

The West Nile Delta project aims to produce 5 trillion cubic feet of gas and 55 million barrels of condensate. Production is expected to begin in 2017 and reach up to 1.2 billion cubic feet a day, or about 25 percent of Egypt's current production.

BP Group Chief Executive Bob Dudley says the project is his company's "largest foreign direct investment in Egypt."

The announcement comes days ahead of a major economic conference aimed at boosting foreign investment in the country, which is still reeling from years of unrest following the 2011 uprising that toppled longtime autocrat Hosni Mubarak.

On Thursday, Egypt's Investment Minister Ashraf Salman said the government hopes to attract up to $35 billion for about 50 projects at the conference.

Egypt has already attracted some $1.3 billion in foreign investment in the first quarter of the fiscal year, Salman said. He said the government hopes to reach $8 billion by the end of the fiscal year in June, nearly double the amount from the previous year.

BP's North Africa Regional President Hesham Mekawi described the gas project as "a critical milestone in the Egyptian oil and gas history. It marks the start of a major national project to add significant production to the domestic market."

Rising consumption has outstripped Egypt's domestic production, and over the past year Egyptians have endured prolonged power outages. The government has meanwhile struggled to maintain energy subsidies— estimated at around one fifth of the budget in 2013.

Egypt's major gas fields, most over 10 years old, are maxing out, and new ones won't start producing for years. Oil and gas companies have balked at new investments, citing lingering instability and the government's insolvency. The ministry currently owes at least $4.5 billion to international oil and gas companies.