Offshore Egypt a win for Schlumberger

With pressure on the sector easing, a subsidiary of field services company Schlumberger said it secured a multi-million dollar contract for offshore Egypt.

Schlumberger, which has headquarters in Houston, is the largest oil and gas field services in the world. Its subsidiary, OneSubsea, secured a $170 million contract from Belayim Petroleum Co., an Egyptian player known also as Petrobel, for help with the development of the Zohr natural gas field off the coast of Egypt.

According to OneSubsea President Mike Garding, the Zohr field is the largest of its kind discovered in the Mediterranean Sea. In March, OneSubsea secured a contract from BP for work on a complex of West Nile Delta fields off the coast of Egypt.

On Monday, BP and its regional partner, the Egyptian Natural Gas Holding Co., sanctioned a fast-track scheme to bring 300 million cubic feet of natural gas per day to the domestic Egyptian market from the deepwater Atoll development by the first half of 2018.

As regional economies struggle under the strains of lower oil prices, the International Monetary Fund has said the discovery of natural gas off the Egyptian coast should help ensure positive economic growth.

For Schlumberger, the deal follows more than a year of lackluster momentum in the side of the energy sector it services. When releasing financial data through March 31, the company said its 16 percent drop in revenue was one of its steepest since late 2014.

Chairman and CEO Paal Kibsgaard said at the time he expected spending cuts in exploration and production would be sharper than previously expected.

Since the end of March, crude oil prices are up about 30 percent, which may be offering energy companies a stronger capital base for spending on exploration and production, the side of the industry serviced by companies like Schlumberger.