Major gas discoveries offshore propel demand for technologies, services
Egypt is a mature fossil energy market attracting increased international attention. However, there is a continued demand for new energy technologies from innovative US suppliers committed to long-term partnerships with Egypt.
In the below Q&A, Mai Abdelhalim, commercial specialist, US Embassy, Egypt discusses the latest trends and opportunities in Egypt’s oil and gas market. Her office is part of the US Commercial Service of the Department of Commerce’s International Trade Administration and its worldwide export assistance network.
US Department of Commerce (DoC): How is the economic outlook for Egypt, and how significant is the oil and gas industry to its economy? How does the country compare to other major oil producing nations?
Abdelhalim: Egypt is the largest non-Organization of Petroleum Exporting Countries oil producer in Africa, and the largest oil and gas consumer on the African continent. With a growing population and 94% of energy consumption coming from fossil fuels, Egypt has more recently been forced to transition from exporting energy to importing these resources to meet the country’s needs. In recent years, there have been several oil and natural gas discoveries, both onshore and offshore. One of the largest is the 30-tcf Zohr discovery in the Mediterranean, as well as the North Alexandria and Atoll discoveries. The oil and gas industry now accounts for 16% of Egypt’s gross domestic product, and 54% of its foreign direct investment.
Domestic energy is a major focus of the Egyptian government as a way to reduce the country’s dependence on imported energy. The high cost of energy subsidies in Egypt has contributed to high budget deficits and subsidy cuts remain destabilizing. However, the Egyptian government has attempted to improve the economy by reducing subsidies, floating the Egyptian pound, and improving the business climate.
DoC: The Italian energy company Eni made a large gas discovery at Zohr in deepwater off Egypt’s Mediterranean coast. What is the current status?
Abdelhalim: This discovery, made in August 2015, is the largest in the Mediterranean and represents about 30 tcf. The gas field will produce an estimated 900 MMcf/d by the end of 2017. It is expected to reach 2,700 million metric standard feet per day when it reaches full production, which is currently projected to be in December 2019. An estimated $16 billion is expected to be invested over the lifetime of the project. Schlumberger of Houston, Texas, is the designated company servicing the rigs for Eni. Zohr is expected to almost double Egypt’s gas reserves and allow it to export gas by the end of 2019.
DoC: To what extent does the Egyptian government embrace foreign investment in its oil and gas industry?