Egypt ramps up oil and gas exploration and boosts production

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In the years since 2015, when gas production was low and Egypt had to rely on imports to meet its needs, the government has implemented policies to boost oil and gas output at home. The 2017 Law for Gas Market Activities Regulation helped the authorities attract greater international investment in the offshore segment, and this was further supported by the establishment of the Natural Gas Regulatory Authority. Recent bidding rounds have led to a diverse mix of national and international energy firms operating in the hydrocarbons sector, while the digitalisation of offshore operations is helping to solidify Egypt’s position as a leading energy investment destination in the Mediterranean region.

Pre-2022 Projects

The El Zohr field, discovered by Italy’s Eni in 2015, is the largest gas find in Egypt and the wider Mediterranean region to date. It is located in the Shorouk concession, 190 km north of Port Said. Gas production levels reached 2.7bn standard cu feet per day (scfd) in 2019, and work carried out in 2020 is expected to boost associated oil output. Eni drilled two wells in the south of the gas field that connect to an onshore plant, and upgraded subsea and onshore facilities. In February 2022 Tarek El Molla, the minister of petroleum and mineral resources, said that the new oil wells of El Zohr 15 and El Zohr 16 were expected to begin producing in the first half of the year.

In January 2021 the Ministry of Petroleum and Mineral Resources (MPMR) announced plans to explore nine new oil and gas sites in the Mediterranean and Red Sea. The ministry estimated an investment of $1.4bn to drill 23 new wells. As of that month 12 agreements had been signed between the Egyptian General Petroleum Corporation and global firms, including Shell and Total.

BP began gas production in the Raven field in April 2021. This is the third stage of its $9bn West Nile Delta development, which consists of five gas fields. This follows the Taurus/Libra and Giza/Fayoum stages in 2017 and 2019, respectively. BP highlighted that natural gas will be an integral part of its net-zero carbon emissions strategy and that revenue from gas will be used to fund several renewable energy projects. The International Energy Agency and several European governments have suggested that natural gas be used as a transitional fuel as the world moves away from fossil fuels and towards renewable energy. Egypt is expected to play a key role in the export of gas to Europe and other MENA countries given that it is home to an estimated 2.1trn cu metres of natural gas reserves, according to BP data.

2022 Events

At the start of 2022 eight exploration blocks across an area of 12,3000 sq km were awarded to Eni, BP, Apex International, Energean Egypt, United Energy, Sipetrol and INA. The blocks are located in the Mediterranean Sea, the Gulf of Suez and the Western Desert. Investment is set at a minimum of $250m, with at least 33 exploration wells to be drilled.

Discoveries are set to attract greater foreign investment. In February 2022 UAE company Dragon Oil made its first discovery in Egypt in the Gulf of Suez, with reserves estimated at 100m barrels of crude – one of the largest discoveries in the region in the last two decades. Dragon produced around 60,000 barrels per day (bpd) of oil in early 2022, and this is forecast to rise to between 65,000 and 70,000 bpd after the discovery.

The government has worked to leverage international events to underscore Egypt’s role as a leader in the space. In February 2022 the Egypt Petroleum Show hosted 450 exhibitors from 80 countries, and welcomed around 26,000 visitors.

In October 2022 the MPMR will hold the 11th edition of the Mediterranean Offshore Conference and Exhibition in Alexandria to continue to garner interest in its offshore segment. The 2019 event focused on the digital transformation of Egypt’s energy sector, and efforts in this area saw Egypt launch its first digital upstream platform in 2021. Called the Egypt Upstream Gateway, it manages exploration and production data and promotes opportunities via international bidding rounds. It was first used to award the eight blocks in early 2022.

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