16th October 2016
Egypt is rich in oil and gas, with proved oil reserves of 3.5 BBbl and reported gas reserves of 65.2 TCF at end 2015 (BP Stats). Egypt benefits from a relatively low cost operating environment and a good geographical location close to different markets. There is a wide range of assets in Egypt; oil/gas, onshore/offshore, deep/shallow water, mature producing assets and exciting exploration blocks. Infrastructure and facilities exist with significant spare capacities.
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Figure 1: Egypt Oil and Gas Production History
Egypt’s oil and gas production history is shown in the figure above. Oil production started increasing significantly in 1979 rising from 145 MBbl/d to a peak of 941 MBbl/d in 1998. Production then declined to 672 MBbl/d by 2010. Subsequent modest recovery is mainly attributed to new/increased production from Western Desert and Nile Delta fields. A stable production trend can be maintained in the short to mid-term via new plays in Western Desert and IOR/EOR developments. Figure 2 is a Strength, Weakness, Opportunity, Threat (SWOT) analysis of Egypt’s oil sector:
Figure 2: Egypt Oil SWOT Analysis
Egyptian gas is currently playing a significant role and has attracted recent interest due to the 2015-16 major discoveries in the East Mediterranean and Nile Delta. Egypt’s gas production steadily increased through to 2009, when a number of factors, particularly regional instability, resulted in production starting to drop from 6.1 Bscf/d to below 4.5 Bscf/d in 2015. However, the discoveries being made and already planned projects are set to reverse this trend and bring Egypt’s gas production to an all-time high within the next 2-3 years. Figure 3 is a SWOT analysis of Egypt’s gas sector:
Figure 3: Egypt Gas SWOT Analysis
A Mezzeh of Opportunities
There is renewed interest in Egypt from Egyptian and foreign investors and financial firms seeking flexible, lower cost opportunities. The rich diversity of source rocks and reservoirs, plus the challenges of imaging them mean that Egyptian explorers have a huge range of options to locate new hydrocarbon accumulations. Examples include pay in the Jurassic/Carboniferous of Western Desert and Miocene and deep Oligocene pays offshore Nile Delta. The East Mediterranean assets are also potential suppliers of gas to the growing Egyptian energy market.
Currently, we estimate up to 40 fields/prospects may be available as joint venture opportunities in Egypt. They vary in type, location and maturity, with “delicacies” to suit all tastes, ranging from US$10 MM to US$200 MM and up to US$1,000 MM+ investment levels.
Improvements in gas price, including direct sales to consumers, have spurred gas investment (some condensate upside), resulting in major new finds with fast-track developments. Recent “stability” in oil price combined with input of fresh entrepreneurial skills should revitalise the oil sector as well.
This article was also published in Egypt Oil and Gas Web Portal, on October 15th, here.
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