For decades Egypt has been one of Africa’s largest petroleum producers. Though political unrest has diminished this capacity somewhat in recent years, the country is now hoping to attract further international interest as an exploration site and a production centre. It is aided in this effort by significant offshore and onshore discoveries, a new gas law and regulatory agency, and state efforts to improve the environment for foreign investment,.
According to the “BP Statistical Review of World Energy 2017”, at the end of 2016 Egypt’s total proven natural gas reserves stood at 65.2trn cu feet, a figure bolstered by several major recent offshore discoveries now coming on-line.
Production at the 100-sq-km Zohr Field, discovered in August 2015 by Italian operator Eni, began in December 2017 at an initial rate of 353m standard cu feet per day (scfd). Located in the Mediterranean Sea 190 km north of Port Said, Eni estimates that the field contains 30trn cu feet of gas.
The West Nile Delta Project, operated by UK-headquartered BP in partnership with German company DEA AG, consists of five gas fields located 65-85 km off the coast of Alexandria. With discoveries made throughout 2000-10 and a final development agreement signed in March 2015, total production from the fields is expected to reach up to 1.3bn scfd, equivalent to 30% of Egypt’s current gas output. First gas was exported to the national grid in March 2017 from the Taurus and Libra fields, which have the reserves to provide over 600m scfd via pipeline. Production from the remaining fields is scheduled to start in 2019, with further developments to come.
BP has also been conducting development work in the North Damietta Offshore Concession in Egypt’s Nile Delta. Test production began in December 2017 at the Atoll Field, which holds an estimated 1.5trn cu feet of gas reserves, and is expected to produce 300m scfd of gas and 8000 barrels of condensates per day. BP announced another major gas discovery in the block in March 2017 stemming from an exploration well 60 km north of Damietta City.
These discoveries have generated even more international interest. According to minister of petroleum and mineral resources, Tarek El Molla, foreign firms have entered into 83 agreements for hydrocarbons exploration and production since 2013. By December 2016 Total, Eni and BP had all signed new exploration agreements worth around $200m in total. BP group chief executive Bob Dudley said in 2016 that the company would be investing more in Egypt in 2016/17 than in any other country, and $13bn up to 2020, according to a November 2016 press release from the UK’s Cairo Embassy. In March 2017 international press reported that El Molla had signed three additional exploration deals worth a total of $81.4m for 16 new fields in the Western Desert: Royal Dutch Shell would invest $35.5m for one, while US-based Apex International Energy would invest $45.9m in two projects. In September 2017 Egypt Oil and Gas highlighted an announcement from the General Petroleum Company for an exploration tender in the Eastern Desert. “Egypt has tremendous potential for exploration but new discoveries are deep, meaning firms need to invest in advanced and specialised technology to conduct seismic surveys and feasibility studies,” David Chi, vice-president and general manager at hydrocarbons firm Apache, told OBG.
The New Gas Market Law, which was approved in July 2017, is significant for this new exploration. Previously, contract prices were negotiated prior to petroleum extraction, placing the burden of risk on the company should activities prove to be more costly than had been anticipated. The new law is expected to reduce this risk. In December 2017 El Molla said the executive regulations would be published in February 2018.
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