Iran Energy News Oil, Gas, Petrochemical and Energy Field Specialized Channel
Related Articles
After uncertainty earlier in the year, as Egypt came to rely heavily on Israel for its gas imports, the North African state finally seems to be getting its oil and gas industry back on track. A planned expansion of its Zohr gas field and new exploration projects are expected to put Egypt back on the map for its energy resources. Further, investment in innovative technologies is expected to boost production rates.
Earlier this year, Egypt experienced a sharp drop in its oil and gas exports. Its production of oil has been falling over the last decade, from a high of 930,000 bpd in 1996 to 580,000 bpd in 2020. Egypt’s natural gas output fell from 7.2 billion cubic feet per day (bcfd) in 2009 to approximately 6.5 bcfd in 2020. This is largely due to the country’s reliance on ageing oil and gas fields, with little investment in new exploration activities in recent years.
Egypt’s gas output looked more positive following Eni’s discovery of the massive Zohr gas field in 2015. However, there have been few major discoveries since. In July, the ratings agency Fitch revised its forecast for Egypt’s gas production in 2023, anticipating a decline of 4 percent from its previous 1 percent year-on-year growth forecast. It blamed this largest on the high depletion rates of the country’s existing oil and gas fields, such as those in the Western Desert, West Delta Deep Marine and onshore fields in the Nile Delta.
Egypt’s gasoline exports declined in value between January and February this year, according to the Central Agency for Public Mobilization and Statistics (CAPMAS). Meanwhile, crude exports dropped by 58.8 percent to $243 million in January and February this year, compared to $590 million in the same period last year, and the value of natural and liquified gas fell by 12.2 percent.
In August, Israel agreed to increase its exports of natural gas to Egypt from the offshore Tamar field, according to Energy Minister Israel Katz. This is expected to “increase the state’s revenue and strengthen diplomatic ties between Israel and Egypt”, stated Katz. The demand for gas in Egypt has been growing, while its domestic gas production has fallen. Egypt’s gas output dropped by 9 percent year-on-year between January and May. This has led to power shortages during heatwaves, which drove up demand.
Katz approved the exports of any surplus gas once the national demand of Israel has been met. While Israel holds substantial offshore gas deposits, the government has set a limit on how much of its gas can be exported, to ensure Israel’s domestic needs are being met. In 2022, just 325.25 bcf of Israel’s 751.9 bcf gas production went to Egypt and Jordan.
Despite difficulties in meeting the country’s energy demands, Egypt has big plans for its oil and gas industry in the coming years. In July, Egypt approved three binding oil and gas agreements for the drilling of multiple exploration wells at a reported value of $319 billion. This includes two projects searching for oil and gas in the Mediterranean Sea and one project to search for oil west of the Gulf of Suez. The North African state has plans to drill 35 exploration wells in total in the next two years, at a projected cost of $1.8 billion. The wells will be drilled by Eni, Chevron, ExxonMobil, Shell and BP.
This month, the government announced plans to expand the Zohr gas field, which will include the drilling of multiple new wells in 2024 and 2025. This comes as part of the government’s strategy to strengthen Egypt’s energy sector. Egypt hopes this expansion will help meet its growing domestic energy needs and is committed to new research and exploration activities.
Egypt’s Minister of Petroleum and Mineral Resources, Tarek El-Molla, highlighted the importance of the partnership between Petrobel, a subsidiary of the Egyptian General Petroleum Corp., and the Italian energy company Eni in Egypt’s oil and gas industry. He emphasised the need to ramp up drilling activities as well as to develop and roll out innovative technologies to improve production rates. Petrobel’s Chairman Khaled Mowafi announced that the company’s production of gas, oil, condensates and butane totalled 93 million barrels of oil equivalent in the past year. Meanwhile, investments in the exploration, development, and operation of gas and oil fields amounted to approximately $737 million.
While Egypt remains highly dependent on gas imports to meet its growing national energy demand, it expects to develop its domestic resources substantially over the coming decades. The Egyptian General Petroleum Corp and several international oil majors are expected to invest heavily in exploration activities to help boost the country’s oil and gas output to improve energy security, supported by the funding of innovative technologies expected to further drive up production.
