OTC 2016: Egypt Rejuvenates Economy, Offers Opportunities for Oil and Gas Investment
The discovery of the Zohr natural gas field, the largest in the Mediterranean region, has begun to rejuvenate prospects for the Egyptian economy. Located offshore Egypt, the Zohr field holds more than 30 Tcf of gas in place. Onshore site preparation began in March, and first gas to market is expected in December 2017.
Tarek El Molla, Egypt’s Minister of Petroleum and Mineral Resources, spoke at an industry breakfast on Tuesday at the Offshore Technology Conference in Houston, which addressed the challenges facing the Egypt government and the country’s development of oil and gas resources.
El Molla said Egypt ranks 16th in global gas reserves, 15th in global gas production, and is the second-largest gas producer in Africa. However, the country’s demand for gas outpaces its supply, making it dependent on imported gas largely from Iraq and Jordan. Egypt’s primary energy mix is 53% gas, 41% oil, 2% coal, and 4% renewables and hydropower.
With an eye toward energy security, the country plans to accelerate the development of oil and gas discoveries, aiming to boost production by approximately 6 Bcf/D during the next 5 years involving an investment of more than USD 35 billion.
The Zohr discovery has attracted foreign companies’ interest and potential investment, El Molla said. He highlighted the undiscovered potential in the Nile Delta Cone (232 Tcf), Levantine Basin (122 Tcf), the Western Desert (100 Tcf), and the Gulf of Suez (112 Tcf), providing further enticement to foreign investment.
El Molla said the government is focusing on boosting and diversifying its energy supply and managing its energy demand. An integrated plan is targeting a more balanced energy generation mix within the next 10 years. Financial sustainability is being sought by reforming energy subsidies and particularly important, reducing the government’s historical debt, or arrears. In the past 2 1/2 years, the country has decreased its arrears from USD 6 billion to USD 3 billion by borrowing money, making payments in kind to partners, and making all payment in Egyptian currency.
Egypt is increasing its refining capacity by 10% to 41 million tons, dedicating USD 8.2 billion to nine projects, and investing USD 800 million in 1100 km of new oil and gas pipelines.
The Egypt government approved a new gas law that mandates the creation of a new independent gas regulator as a first step to reform the gas market and is offering opportunities to the private sector to enter and compete in the wholesale downstream market.
El Molla said, “We are going to call a new bid round for 28 blocks in the coming few weeks.” The blocks are located in the Red Sea, Gulf of Suez, Eastern Desert, Western Desert, and the Mediterranean.
By Pam Boschee – Senior Manager, Magazines, for SPE.
(Source: SPE News)