Tuesday, December 18, 2018

Foreign oil and gas companies in Egypt to increase investments to USD 11 bn - ENTERPRISE

Tuesday, 18 December 2018

Investment in Egypt by global oil majors is on track to rise c. 10% this fiscal year, unnamed industry sources told the local press. Total investment by global exploration and production companies should close the state’s 2018-19 fiscal year at c. USD 11 bn against USD 10 bn a year ago in part thanks to the Oil Ministry clearing some USD 5.1 bn in arrears it owed the companies, the story says. Major projects in the pipeline include second-phase drilling in the supergiant Zohr field, with a USD 300 mn tenth well set to be drilled next month, continued work in the North Alexandria offshore concession and the start of production from the first three wells of West Nile Delta. The Oil Ministry has recently reached an agreement with the companies to expedite their work on the latter projects. The projects are expected to produce a combined 800 mcf/d of natgas during the current fiscal year.

Background: The news comes as the ministry is set to launch its first tender on the Red Sea, offering 10 exploration blocks within the coming two weeks. The ministry has been pushing what it says will be friendlier terms on production sharing for new E&P agreement starting in 1Q2019 and as the ministry promises that it will repay in full back dues owed to IOCs by the end of 2019. The catch: Smaller global and national players are complaining that while the oil ministry is making good on payments owed to the global majors, smaller outfits are being left with mounting receivables.