In this blog, we take a closer look at the Oil and Gas industry in Egypt. It is surely one of the most interesting industries in Egypt, with hydrocarbon production being one of the largest single industrial activities in the country.
An Overview of the Energy Sector in Egypt
It has long been proven that Egypt has significant energy sources, and the Government of Egypt is well known to encourage international oil companies to be involved in the country’s oil and gas sector. Indeed, since the 1990s, the Egyptian government has enacted laws aimed at attracting international, regional and domestic investment.
The country is generally regarded as having an abundance of energy resources, from both traditional fossil fuels and renewable energy.
At the close of 2018, Egypt’s proven hydrocarbon reserves were estimated to be at 3.3 billion barrels of oil and 77.2 trillion cubic feet (TCF) of natural gas.
Making the energy industry in Egypt even more fascinating, is the role the country plays in the international energy markets through the operations of the two Suez Canal transit points and the Suez-Mediterranean (SUMED) pipeline. Given that the Suez Canal is a vital transit route for oil and liquefied natural gas (LNG) shipments travelling between North Africa and along the Mediterranean Sea to Asia, the Egyptian government derives a significant source of revenue from the fees collected from these two transit points.
Let’s review some of the facts and figures about the oil and gas sector in Egypt:
- – In 2018, the sector represented approximately 13.6% of the country’s total GDP.
- – The petrochemical sector represents about 12% of industrial production.
- – It generates revenues totalling USD 7 billion, equivalent to nearly 3% of GDP.
- – Egypt has the largest refinery capacity in Africa at a nominal 840,000 barrels per day, although it is thought to operate below this capacity.
- – The petroleum industry in Egypt is managed by the Ministry of Petroleum and Mineral Resources, under which five state-owned companies operate:
- The Egyptian General Petroleum Corporation (EGPC)
- The Egyptian Natural Gas Holding Company (EGAS)
- The Egyptian Petrochemicals Holding Company (ECHEM)
- The Ganoub El-Wadi Holding Company (GANOPE)
- The Egyptian Geological Survey and Mining Authority (EMRA)
Recent updates from the Oil and Gas industry in Egypt
According to a report by the country’s Ministry of Petroleum and Mineral Resources, during 2022, Egypt was the location for 53 new oil and gas discoveries.
These discoveries include 42 oil wells and 11 gas wells, and they are from all over the country, from the Western Desert, to the Suez Gulf, the Mediterranean Sea, and even Nile Delta.
The last discovery in 2022 was in the Nargis block and Reuters reported that the discovery has 3.5 trillion cubic feet of natural gas reserves.
It was a busy industry in Egypt throughout the year, with the total production of all petroleum products in Egypt reaching 79.50 million tons. A total of 27.80 million tons of crude oil and condensates was produced, as well as 50.60 million tons of natural gas, and 1.1 million tons of butane.
2022 also saw Egypt’s exports of natural gas totalling $8.40 billion, an increase of 171% from the previous year. Some of this increase has been attributed to Europe transitioning away from Russian gas. Egypt’s output of petroleum products also increased, amounting to approximately 79.5 MT.
It came as no surprise that further investment had been earmarked for the sector. On December 22nd 2022, the Minister of Petroleum and Mineral Resources Tarek El-Molla announced that Egypt was set to invest a total of $2.1 billion in oil and natural gas exploration plans until 2025.
In December, as part of the ministry’s strategy to boost investment in oil and gas in Egypt, the country also launched a new round of bids for oil and gas exploration rights in the Nile Delta and the Mediterranean Sea. The tender is being offered by Egyptian Natural Gas Holding Company and includes 12 blocks, with six onshore and six offshore.
News from the Oil and Gas industry in Egypt
Let’s have a look at some of the news from the oil and gas industry in Egypt, from 2023 so far.
- – February 2023: Rig extension contracts. Dubai-based Shelf Drilling won a contract extension in Egypt for an active rig it operates. Shelf Drilling is a shallow-water drilling specialist and it secured the one-year contract extension for its jack-up Rig 141 from Gemsa Petroleum Company.
- – February 2023: Shell’s carbon capture deal. Shell reached a deal with Energean to review carbon capture and storage opportunities in Egypt. Shell is known to be a key player in Egypt. The two companies agreed to explore “a mutually beneficial decarbonisation solution.”
- – March 2023: Two rig extension contracts. In March, Neptune Energy announced that it is expecting to drill its first operated well in the summer of 2023 in Egypt’s North West El Amal concession in the southern Gulf of Suez. The well targets the Yakoot structural trap in shallow water.
- – March 2023: Cheiron Energy. The largest independent Egyptian oil and gas E&P company, Cheiron Energy, stated in March 2023 that the Early Production Facility (“EPF”) for the GNN oil field in the Gulf of Suez has been brought on stream. The GNN field is in the Geisum and Tawila West Concession.
The Early Production Facility is located in the central area of the oil field and it features a conductor support platform, a mobile offshore production unit and a 10-inch oil export pipeline. The completion of two additional predrilled wells, GNN-3 and GNN-8 was expected in the subsequent weeks and then up to 4 additional wells will be drilled from the facility.
Special Piping Materials will be continuing to support projects in the Oil and Gas industry in Egypt over the coming months and years. There is certainly a lot of activity taking place.