Authored by Felicity Bradstock via OilPrice.com,
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Egypt plans to build a $7 billion petrochemical complex and launch new oil and gas auctions to boost domestic production.
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The country aims to enhance energy security and attract foreign investment, despite recent economic challenges and energy shortages.
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Egypt is balancing its fossil fuel development with renewable energy targets, though it has adjusted its green energy goals.
Oil-rich Egypt has big plans for the future of its fossil fuel development with several major new auctions and investments planned for the North African country. A new $7 billion petrochemical complex and other major oil and gas investments are expected to reinvigorate Egypt’s oil industry, although it may have to win back investor confidence following a disappointing financial year.
Egypt is a major African fossil fuel producer, the second-largest non-OPEC producer of liquid fuels after Angola. It was also the second-largest producer of natural gas in Africa in 2022, after Algeria. The expansion of Egypt’s gas production has been supported by the launch of operations at several major offshore fields over the past decade, including its Zohr gas field. However, Egypt’s gas production has been forecast to fall in the coming decades as Zohr matures, as well as due to several recent exploration failures.
In February, Egypt signed a framework agreement with U.K.-based Shard Capital and Saudi Arabia’s Al-Qahtani Group to construct a $7 billion petrochemical facility in New Alamein City in the northwest of the country. The project will be overseen by a consortium, including members from Shard Capital, Al-Qahtani Group, and the UAE’s Royal Strategic Partners. Once complete, it is expected to produce 3.1 million tonnes of eight different petrochemical products annually.
Karim Badawi, Egypt’s Minister of Petroleum and Mineral Resources, said that advanced technologies will be incorporated into the facility’s design to reduce the impact on the environment. Badawi said the development is key to improving the value of Egypt’s natural resources. The complex is expected to enhance Egypt’s export capacity significantly. It is also expected to help deepen ties between Egypt, Gulf countries and the U.K.
In March, Egypt’s Ministry of Petroleum and Mineral Resources announced new investment opportunities, aimed at expanding exploration and production activities. The ministry plans to offer seven undeveloped fields in the Mediterranean and six exploration areas in the Gulf of Suez and the Western Desert. Companies can bid using the Egypt Upstream Gateway (EUG) over the next two months, until 4th May 2025.
The ministry recently closed the bidding round for 13 exploration areas and mature fields, after several offers were received, which are currently being assessed. The combined investments from the previous auction could bring in more than $700 million in investments.
In the new auction, the seven undeveloped fields are being offered in two clusters – the Aten, Merit, and Rahmat fields, as well as the Notus, Salamat, Satis, and Salmon fields. This approach is aimed at increasing investment returns, reducing production costs, and streamlining development and production processes.
The government aims to boost Egypt’s energy security through the expansion of the country’s oil and gas industry.
The largely untapped natural gas reserves in the Mediterranean are expected to help make Egypt more energy-independent in the future, as the national energy demand continues to grow. Egypt’s President Abdel-Fattah El-Sisi views the country as a production and re-export hub for international markets.
As host to the 2022 COP27 Climate Conference, Egypt also stated aims to expand its renewable energy sector. Before hosting COP27, Egypt pledged to increase renewable energy production to 42 percent of its energy mix by 2035, a target which it later moved forward to 2030. In June 2024, then-Electricity Minister Mohamed Shaker announced the ambitious target of an energy mix with 58 percent renewables by 2040.
However, in October, the government revised its green energy target, reducing the figure to 40 percent of the energy mix. During the announcement, Petroleum Minister Karim Badawi said that natural gas will remain a vital part of the country’s energy mix for several years. At the opening session of the Mediterranean Energy Conference 2024, Badawi stated, “This is a message to all of us to work together to increase discoveries and attract more investments through the bids being offered for exploration, aiming to achieve new discoveries in the region, which holds more wealth, particularly natural gas.”
Egypt’s government is currently working to rebuild trust with foreign companies following the 2024 energy crisis. Following a sharp gas production decline, Egypt was forced to import billions of dollars’ worth of gas cargoes to meet its national demand last summer. The energy ministry had to resort to load-shedding to keep its grid online as its gas supplies depleted and demand rose. As Egypt was facing a currency crisis, countries, including Saudi Arabia and Libya, stepped in to help Egypt fund the gas imports it needed.
Egypt’s pound experienced a devaluation of 60 percent between March and September 2024. In addition, Egypt reportedly accumulated around $6 billion worth of debt for gas and fuel supplies. President Sisi and Energy Minister Badawi now aim to attract new investments through the new oil and gas auctions, as well as reassure companies that already have operations in Egypt.
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