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Egypt’s oil and gas future looks very bright. The large scale concessions awarded during the EGYPS2019 conference in Cairo, 11-13 February, shows the appetite of IOCs, such as Shell, BP and ENI in this emerging energy hotspot.
After years of a major slump, partly due to continuing payment and security issues, the Pharaohs are again back in the top league. Continuing concerns about security in Egypt’s Western Desert or the Sinai no longer seem to be a breaking point for investors.
At the second day of EGYPS2019 the announcement of five onshore and offshore licenses by EGPC, as presented by Egypt’s minister of energy Tarek El Molla, has created a very bright future for the North African oil and gas producer.
The success story of the offshore deepwater gas field Zohr, operated by Italian oil major ENI, could be supported further by positive results from current exploration efforts in the offshore Noor field. If expectations are met, a new gas hub could be in the making, combining Cypriot and Israeli production with Egypt’s existing LNG infrastructure.
The long awaited results of the Egyptian natural gas holding company EGAS were announced on the 12th of February. Dutch oil major Shell was awarded 3 concessions, all crude blocks in sector 7 West Fayoum, sector 9 South East of Horus, and sector 10 South AbuSnan. Italian oil major ENI, currently in the news with regards to its major offshore gas projects Zohr and Noor, was awarded sector 11 East of Siwa, while sector 2 went to the General Petroleum Company, sector 4 to Neptune Energy, and sector 5 North Beni Suef to Merlon International.
With regards to the Egyptian gas prospects, American oil giant ExxonMobil, which hasn’t been very active in Egypt for years, reentered the North African country by winning the north of Amreya Marine Company concession area. The North Sidi Gaber, as well as North El Fanar areas, went to Shell and Petronas. The North West Sherbin concession has been awarded to British oil major BP and Eni.
The re-emergence of major IOC interest should be not underestimated. Egypt’s former rough period, especially during and after the Arabic Spring and the rule of Muslim Brotherhood president Mursi and the military coup shortly after, has had a very negative impact on upstream projects. Most IOCs and independents working in Egypt at the
Cairo’s dreams about becoming an energy hub, and supplying European markets, are once again alive and kicking. Shell’s Egypt Chairman Gasser
The Shell official is very optimistic with regard to the willingness of Israel and Cyprus to consider the Egyptian option. Some developments are expected around the East Mediterranean Gas Forum meeting in March in Cairo. At present, provisional agreements have been signed between Cyprus and Egypt to pipe gas from Cyprus’ field Aphrodite to Egypt. Israel has already a gas export deal with Egypt.
The deal was set up by Egypt’s
The underlying economics are clear, as the LNG liquefaction plants in Idku and Damietta already exist, removing the possible multibillion investments needed if choosing other options.
In addition to the IOCs interest, Arab oil & gas company Dana Gas also stated to expect major new discoveries. Dana’s CEO Patrick Allman-Ward stated at EGYPS2019 that his company will start drilling in 2019 in an area it says could become Egypt’s next giant Mediterranean gas field, after seismic data pointed to reserves as large as 20 trillion cubic feet. First drilling operations will be conducted in an area that is expected to hold 406 Tcf. The targeted area is part of the North Arish field, which is located in the East Med.
The year 2019 could become the Red Sea Year, as Egyptian sources indicate that the Egyptian company Ganoub El Wadi Petroleum Company (Ganope) is expected soon to launch its delayed bid round for
The last days rumors have been floating around, especially after that Egypt’s minister of energy Tarek El Molla indicated a bid round on the 12thof February at EGYPS2019.
El Molla stated bluntly that 2019 will be the Red Sea Year. This was also stated by Abed Ezz El Regal, CEO of EGPC. The bid round was expected earlier, but was delayed at the end of 2018 by Ganope. The Red Sea has become a major focus area for EGPC and others, after that Cairo was able to reach a maritime demarcation agreement with Saudi Arabia. Ganope’s CEO Mohamed Abdul Azim stated that his company is expected to drill nine new wells.
Based on the Red Sea geophysical data, which has been acquired lately by a 2D, 10,000 square kilometer survey by Schlumberger, a bid round is expected to be announced within the next days. The
A possible combined effort between Saudi Arabia and Egypt is still in the offing, as some projects could be combined. For sure, Egyptian and Saudi drilling operations could be combined, taking advantage of the growing offshore drilling JVs of bother countries.
The ongoing Saudi Aramco-Rowan JV (ARO) at the International Maritime Industries (IMI) Ras Al Khair Shipyard projects, also could be combined with Egyptian parties. Some new builds or upgrades for the Red Sea arena would be feasible to be done in Egyptian shipyards too.
By Cyril Widdershoven for Oilprice.com