Egypt to invite oil firms to explore for hydrocarbons in Red Sea
CAIRO - Egypt plans to invite international petroleum companies to explore for oil and gas in its territorial Red Sea waters before the end of the year.
Egyptian Minister of Petroleum Tarek al-Mulla said the process would be announced after the processing of seismic data collected by two international oilfield services companies.
US company Schlumberger and British firm TGC invested a combined $750 million on seismic surveys off Egypt’s Red Sea coast. The two companies started work in the area in March and the data collected, the Ministry of Petroleum said, are being processed. The ministry said it expects huge interest in it because of Egypt’s reputation in international energy markets.
Egypt became an important spot on the international oil and gas map after major finds were made off its Mediterranean coast. The discoveries include the Zohr Field, which contains confirmed reserves of 850 billion cubic metres of gas.
Zohr was one of four major gas wells that came online in Egypt in the past year, allowing Egypt to achieve self-sufficiency with 6.7 billion cubic feet of daily production. The government stopped imports in October and is expected to resume gas exports next year
Foreign and local companies spent $27 billion in developing the four wells. The willingness of international companies to invest such huge amounts of money in Egypt boosted the country’s image in international oil and gas markets, the Petroleum Ministry said.
“International oil and gas companies know that this country has a lot to give them,” said Hamdi Abdel Aziz, the spokesman of the ministry. “This is why we expect high interest among international companies in the expected bid for exploration in the Red Sea.”
The government’s repayment of billions of dollars in debt to foreign petroleum companies has also boosted the level of interest. Egypt, which owed $6.3 billion to foreign petroleum companies in 2012, has reduced the debts to $1.2 billion and expects to pay off the remainder before the end of 2019.
“This translated into more investments in the petroleum sector and consequently more finds,” said petroleum expert Ramadan Abul Ela.
Self-sufficiency means a lot for the Egyptian economy. Egypt pays $1.2 billion a month to meet its energy needs. A large portion of that amount is expected to be saved as energy production increases.
This is why there is national enthusiasm in exploring for oil and gas off the Red Sea coast opposite Saudi Arabia. Maritime borders between the two Arab countries were not demarcated until April 2017 when the governments signed a deal that included the handover of two Saudi islands that had been under Egypt’s administrative control since the 1950s.
Saudi Arabia started tapping its Red Sea potential in 2009 when the Saudi Aramco conducted a seismic survey that indicated natural gas. In 2013, it discovered three oil and two gas fields.
There are expectations in Egypt that the Red Sea will be the next major exploration frontier. Cairo has confirmed reserves of approximately 6 billion barrels of crude oil and 23 billion cubic feet of natural gas, the Petroleum Ministry said.
Abdel Aziz described data collected by Schlumberger and TGC as “very positive.”
“There are strong possibilities for the discovery of large amounts of gas and crude oil in the area,” Abdel Aziz said. “This will be very encouraging for international oil and gas companies.”