Egypt opens bidding for new oil and gas exploration

Reuters

• 23 blocks open for exploration
• Oil ministry investing $9bn this year
• BP, Eni and Chevron have projects in the country

The Oil Ministry of Egypt on Monday launched an international bidding round for exploration in 23 blocks by oil and gas companies. 

Of the blocks on offer, 10 are in the Western Desert, seven in the Gulf of Suez, four in the Red Sea, and two in the Eastern Desert.

The tenders are part of the oil ministry’s effort to attract oil and gas investment following an increase in domestic energy consumption and a decline in output.

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Speaking to reporters on Saturday, oil minister Tarek el-Molla said that the ministry had increased its investment forecast for the current financial year to $8.5-$9bn. This would be a 60% increase on the $5.7bn attracted in the 2022/23 financial year. 

The latest bidding round for exploration is the biggest since 2021.

However, “it looks a little bit scattergun,” said Middle East and North Africa economics analyst at Chatham House, David Butter. “It’s not clear to what extent investors will be attracted to these fringe areas.”

Speculation around untapped hydrocarbon resources in Egypt has fuelled excitement among investors following the discovery of the Zohr gas field — the largest in the Mediterranean — in 2015. But the absence of subsequent big discoveries has hindered Egypt’s ability to maintain gas production and its ambition to become a regional gas hub.

“They do badly need a major natural gas discovery or two or three to keep the natural gas sector healthy,” said Butter.

After hitting an all-time high of 7.06 billion cubic feet per day (cfd) in September 2021, natural gas production fell to 5.73 billion cfd in July amid water-infiltration issues at the Zohr field.

In the same month, gas consumption grew to its highest level, hitting 6.8 billion cfd for the first time. The shortfall led to power cuts across Egypt and imports of gas from Israel topping 800 million cfd a month between November and July.

Separately, the ministry announced that it was awarding four blocks from a previous round of exploration bids in the Mediterranean and Nile Delta to Eni, BP, QatarEnergy and Zarubzhneft. 

Earlier this month, Eni, BP and Chevron announced they would be investing $7.7bn, $3.5bn, and $3bn respectively in production and exploration over the next two to four years.