APA Corp. said May 4 it has reached an agreement in principle with authorities in Egypt on a new production-sharing contract (PSC) that would consolidate most of the concessions the company operates through subsidiary Apache Egypt in the Western Desert into one.

The change, which APA said would account for more than 90% of its gross production volumes in Egypt on a barrel of oil equivalent basis, would simplify the company’s contractual relationship with Egyptian General Petroleum Corp. (EGPC). The announcement follows nearly a year of discussions, APA Corp. CEO and president John J. Christmann said in a news release.

The agreement, reached in principle with EGPC and Egypt’s Ministry of Petroleum and Mineral Resources (MOP), creates a single cost recovery pool, adjusts cost oil and gas and profit oil and gas participation, facilitates recovery of prior investment, updates daily operational governance, and refreshes the term length of exploration and development leases, APA said in a news release.

The PSC is subject to approvals by Egypt’s government and ratification by Parliament.

“The new agreement in principle confirms Egypt’s commitment to economic development and public-private partnerships and will facilitate higher investment levels by Apache Egypt, resulting in more drilling, more production and more sustainability projects,” Christmanns said, “while also enhancing talent development opportunities and delivering cost efficiencies through the introduction of new technology.”

Apache said it owns two-thirds of the entity that will become the sole contractor. Sinopec owns the remainder.

“The agreement in principle with Apache Egypt is an important step as we modernize Egypt’s petroleum sector and position our country as a regional energy hub,” said

H.E. Tarek El Molla, minister of petroleum and mineral resources for Egypt, said the agreement is “a win-win for both parties and will help to drive increases in investment and production to the benefit of Egyptians.”