BP and its German partner RWE will raise the nine billion dollars in investment for the project according to their stakes. BP holds 60 percent of the North Alexandria block and 80 percent of the West Mediterranean block.
The petroleum ministry statement quoted Sameh Fahmy, Egypt's Minister of Petroleum, as saying the amendments "included conditions that guaranteed Egypt great advantages."
The amendments impose production deadlines on BP and do not require Egypt to contribute to the nine-billion-dollar investment, while BP and its partner will sell each cubic metre of gas starting from three dollars, up from 2.65 dollars.
BP spokesman Robert Wine told AFP that negotiations for the agreement "had been a long process."
"Under the previous terms it was not commercially viable for us. The government now has a deal it finds acceptable," he said.
Wine said the Egyptian deal was BP's "biggest development we put our signature to" since the Deepwater Horizon rig explosion in April.
BP, whose share value has plummeted since the Gulf of Mexico oil spill, is the largest foreign investor in Egypt and provides with its partners about 35 per cent of the country's gas.
The company has come under fire from the US government over alleged lapses in safety standards.
It could face a seven-year offshore drilling ban in the United States after a house committee agreed a bill to ban licences for any company that lost 10 workers in operations.
Wine said the agreement showed the company could operate "viable projects."
"BP's day-to-day operations are continuing after the spill. There are a lot of very steady good operations around the rest of the world," he said.
BP said on Monday the bill from the oil spill had risen to $3.95bn.
The total includes the bill for containing and cleaning spilt crude, relief well drilling, grants to Gulf states and money paid to the US federal government, it said in a statement.