The Egyptian Natural Gas Holding Company (EGAS) has announced the launch of an international tender for the exploration of natural gas and crude oil in 12 new concessions. These blocks include 10 offshore and two onshore sites located in the Mediterranean and Nile Delta regions. This announcement was made by Minister of Petroleum and Mineral Resources, Karim Badawi, during a high-profile meeting with representatives from international oil companies.
During the meeting organized to discuss strategies for increasing Egypt’s oil and gas production, Minister Badawi highlighted that the tender aligns with the Egyptian government’s 2023 plan. This plan aims to drill 45 exploratory gas wells in the Mediterranean and Nile Delta with an investment of $1.9 billion, targeting completion by mid-2025.
“The launch of this tender is part of our ongoing efforts to attract new investments in oil and gas exploration to boost natural gas production,” Minister Badawi stated, adding that “The offered concessions will be available through the Egypt Upstream Gateway (EUG) online platform, which facilitates easy access for international investors.”
The meeting was attended by key figures in the oil and gas industry, including Sameh Sabry, Senior Vice President and MD – Middle East and North Africa of Wintershall Dea; Iman Hill, Company Manager for VAALCO Energy in Egypt; Dalia El-Gabry, CEO of Shell Egypt; and Nicolas Katcharov, CEO of International Energean. Minister Badawi also announced a range of additional investment opportunities and incentives in the fields of research, exploration, and field development in open areas via EUG.
The Egyptian government has introduced several incentives to attract international oil and gas companies to participate in the tender:
1. Tax Breaks and Royalty Reductions**: Companies engaging in exploration activities will benefit from substantial tax breaks and reduced royalty payments, making investments more financially appealing.
2. Fast-Track Licensing: A streamlined and expedited licensing process through the EUG online platform ensures quicker and more efficient approval times, reducing bureaucratic delays.
3. Infrastructure Support: The government promises robust support in terms of existing infrastructure, including access to pipelines, ports, and processing facilities, minimizing the need for additional capital expenditure by the companies.
4. Profit-Sharing Agreements: Attractive profit-sharing models where international companies can retain a higher share of the profits during the initial years of production.
5. Local Workforce Development: Initiatives to train and employ local workforce in the oil and gas sector, ensuring skilled labor availability while also contributing to local employment.
Egypt’s natural gas production has seen a decline in recent years. In 2023, the country’s natural gas output was the lowest since 2021, which saw production levels at 7.2 billion cubic feet per day. This figure dropped to an average of 6.2 billion cubic feet per day in 2022. Despite the decline, global energy giant British Petroleum (BP) has committed to investing $3.5 billion in the exploration and development of natural gas resources in Egypt over the next three years. This investment is expected to significantly contribute to reversing the downward trend in production and help Egypt meet its energy demands.
BP’s investment aims to add approximately 1 billion cubic feet of natural gas per day to Egypt’s production capacity. This additional volume is expected to be critical in meeting the burgeoning local market requirements, which have been strained due to the decline in production. It is to be noted that Egypt’s domestic natural gas consumption has been increasingly rising due to growing industrial demand and a push towards natural gas as a cleaner energy source for power generation. The local market currently requires around 7.5 billion cubic feet per day to meet its energy needs efficiently.
The tender marks the eighth of its kind to be offered via the EUG online platform, which was launched in 2021. This digital platform has modernized the process of bidding and investment for international companies, making it more efficient and transparent.
The international tender by EGAS represents a significant step in Egypt’s strategy to enhance its oil and gas sector and attract foreign investments. With robust plans and global partnerships, Egypt aims to secure its position as a leading player in the energy market. The combination of targeted incentives, modern digital platforms, and substantial investments like those from BP is poised to meet both the production targets and local market demands successfully.
