This is a best prospect industry sector for this country. Includes a market overview and trade data.
Last Published: 8/9/2019
Overview
Oil and Gas is one of the most dynamic industries in Egypt, and hydrocarbon production is by far the largest single industrial activity in the country. Egypt has significant energy resources, both in traditional fossil fuels and in renewable energy. Egypt’s proven hydrocarbon reserves stood at 3.3 billion barrels of oil and 62.8 trillion cubic feet (tcf) of natural gas at the end of 2017. The Government of Egypt encourages international oil companies (IOC) to participate in the oil and gas sector, and currently more than fifty IOCs are operating in Egypt.

Egypt plays a vital role in international energy markets through the operations of the two Suez Canal transit points and the Suez-Mediterranean (SUMED) pipeline. Expanded in 2015, the Suez Canal is an important transit route for oil and liquefied natural gas (LNG) shipments travelling southbound from North Africa and along the Mediterranean Sea to Asia. Fees collected from the operation of these two transit points are significant sources of revenue for the Egyptian government.

Egypt plans to invest around $38 billion developing its petrochemicals sector over the next five years. The petrochemical sector represents about 12% of industrial production and generates revenues totaling 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 operates well below this capacity, with 508,000 barrels per day processed in 2017. Currently, the government is updating existing refineries, and a new private-sector refinery is also set to begin production.

 
  • 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)
  • Egyptian Natural Gas Holding Company
  • Egyptian Petrochemicals Holding Company
  • Ganoub El-Wadi Holding Company
  • Egyptian Geological Survey and Mining Authority

The Egyptian General Petroleum Corporation (EGPC) concludes concession agreements in cooperation with IOCs in the form of production sharing agreements (PSA). Egypt grants concessions in a specific area through the promulgation of a “special law” by the Egyptian Parliament.

Since the 1990s, the Egyptian government has enacted laws aimed at attracting international, regional and domestic investments. These laws sought to address the regulations and procedures that hindered production and facilitated investment resolutions. One of the challenges that continue to hamper international investors in Egypt’s oil and gas sector is the long history of delayed payments from EGPC. While the government has made efforts to pay out the remaining backlog of arrears to IOCs in order to encourage more foreign partners to invest in exploration and development activities, the government still lags behind. The government has reduced arrears to USD 1.2 billion as of June 2018 and planning to repay all by end of 2019.

The oil sector in Egypt has signed around 83 oil and gas exploration deals with IOCs between November 2013 and December 2017, worth at least USD 15.5 billion, and signing bonuses of more than USD 1 billion for the drilling of 319 wells.  In 2018, a new international bidding round was announced, including 9 blocks for Gulf of Suez and Western Desert.  In 2019, the Minister of Petroleum and Mineral Resources has signed contracts with 12 new exploration and production concessions with Exxon Mobil, Shell, BP and others. The estimate of the investment in the first stage is around $800 million. The new exploration areas include the Western Desert, Gulf of Suez, the Nile Delta, and the Mediterranean. The Egyptian government is currently accepting bids to explore for oil and gas in the Red Sea, and it is expected to open up its Western Mediterranean waters in a new bid round soon.

GOE investment in natural gas was expanded by 25% in FY 2017, adding to an expansion of 33% the previous fiscal year.  Crude oil projects did not see a similar favorable return on investment, but that is not to say the opportunities are not there, as several multinational firms announced commitments to increase their investment to total USD 10 billion in fiscal year 2018/2019.
In December 2017, Egypt’s Zohr gas field started production.  The Zohr field is considered the largest discovery ever made in the Mediterranean Sea. Production is estimated at 30 trillion cubic feet (tcf). There is also the Nooros Gas Field in the Nile Delta which produces 32 million cubic meters per day.  Atoll is another gas field in the East Delta that produces 350 million cubic meters per day and 10,000 barrels of condensate.

Leading Sub-Sectors
  • Compressed Natural Gas (CNG) Technology and Peripherals
  • Drilling Rigs and Related Equipment and Accessories
  • Hi-tech Testing and Measuring Equipment
  • Liquefied National Gas (LNG) Related Technology
  • Natural Gas Vehicles (NGV) Technology and Peripherals

Opportunities
The Ministry of Petroleum and Mineral Resources has announced in 2016 a five-year modernization plan for the sector. The objective is to design and implement a program to enhance the contribution of the oil and gas sector to the economic growth of the country and to be a leader that other sectors can follow. This modernization plan is divided into seven different programs: Investment Attraction, Sector Structural Reform, HR Development and Management, Downstream Performance, Upstream Performance, Hub Strategy, and Decision Support and Data Flow.

The government organizes the Egypt Petroleum Show (EGYPS) annually, which attracts a wide array of exhibitors and attendees, including increasing number of IOCs. The show is one manifestation of Egypt’s ambition to serve as a regional Oil & Gas hub. In 2019, the show had more than 400 exhibitors and around 20 thousand attendees. The next show will take place February 11-13, 2020 at the Egypt International Exhibition Center in Cairo.




Downstream Performance and Energy Efficiency:
  • More than 20 projects have been identified to improve their performance. The ministry has started the feasibility study of around six projects, expected to result in more than $120 million in savings
  • Initiatives for energy consumption reduction by 5%: identified low cost opportunities, Waste Heat Recovery, and Flare Gas Recovery.

Upstream Performance
  • Increase oil & gas production of proven reserves and improve recovery rates and cost performance.

Oil and Gas Hub Strategy (expected to be released in 2019)
  • Outlines how Egypt can use its strategic location to serve as a hub for the region in this sector.

Decision Support and Data Flow
  • Increase digitalization of reporting and decision-making processes across the sector.

There are opportunities for U.S. companies in exploration activities, services, sub-contracting, procurement and engineering services, as well as good opportunities with petrochemical projects.

Web Resources
Contact for the Commercial Specialist in charge of the Energy sector: Dina Bissada, Dina.Bissada@trade.gov
 
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More Information

Egypt Energy Trade Development and Promotion