UAE adds oil and gas sector to business interests in Egypt
CAIRO - Having acquired a 10% stake in the Shorouk concession in Egypt’s gigantic Mediterranean Zohr gas field in March, the UAE-based investment fund Mubadala Petroleum is preparing to explore for oil and gas off Egypt’s Red Sea coast.
Egypt has finalised seismic research off the coast and is in the process of compiling a comprehensive study off the Red Sea coast before inviting oil and gas companies — perhaps by the end of the year — to bid for concessions in the area, which is expected to hold huge mineral reserves.
Mubadala CEO Bakheet al-Katheeri, after an April 25 meeting with Egyptian Petroleum Minister Tarek el-Molla, said the company was interested in long-term cooperation with Egypt regarding petroleum and gas.
Mubadala bought the 10% stake in the Shorouk concession from Italian state-owned Eni for $934 million. Katheeri confirmed that the company had expressed an interest in upgrading Egypt’s crude oil fields.
“Egypt will be at the centre of our company’s attention in the future,” he said.
Oilfield services company Schlumberger and geoscientific data company TGS spent $750 million conducting seismic studies off Egypt’s Red Sea coast. They were spurred by reports of the presence of huge oil and gas reserves in the area.
Mubadala’s interest in Egypt’s Red Sea coast and in the Zohr gas field appears to be a small detail in the growing UAE presence in the Egyptian economy.
Strong political relations between Cairo and Abu Dhabi are translating into equally important economic bonds between the two Arab capitals, motivated by the desire of UAE investors to capitalise on Egypt’s growing importance as a regional economic powerhouse.
“Egypt has a very promising business environment, which is why UAE investors are coming,” said UAE property developer
Abdulla Saeed al-Thani. “I know of several UAE investors who plan to come to Egypt and make huge investments.”
The board of the UAE International Investors Council has advised its members to put Egypt at the centre of investment plans. Council Secretary-General Jamal Saif al-Jarwan confirmed that a March 14 council meeting focused exclusively on investment opportunities in Egypt.
UAE investments in Egypt totalled $6.2 billion in 2017, up from $6 billion the previous year. The United Arab Emirates invests in Egypt’s agricultural sector, real estate sector and tourism sector. In 2017, UAE investments in Egypt’s telecommunications sector amounted to 92.3% of all Arab investments in the sector and 73.9% of all foreign investments in it.
UAE investors are coming to Egypt with an edge over other foreign investors, Thani said, based on their experience in the UAE’s various business sectors that have seen major advances in recent years.
“Egypt is badly in need of the same expertise because it wants to develop the same sectors,” he said.
Egypt is looking to benefit from UAE expertise in port management and development. This explains significant Egyptian interest in cooperating with the UAE’s DP World upgrade of Sokhna Port at the southern entrance of the Suez Canal.
Last November, the Suez Canal Authority and DP World signed an agreement to implement industrial, commercial and housing projects in the Sokhna region. Suez Canal Authority Chairman Mohab Mamish said the projects would revolutionise logistic services in the region, overhaul container handling systems and speed up the port’s development.
Trade exchange between Egypt and the United Arab Emirates is close to $4 billion. At least 877 UAE companies operate in the Egyptian market.
This is not only about UAE interest in the Egyptian economy, Egyptian economists said. It is based on Egyptian openness and interest in UAE investment.
“In the case of the UAE, we are not talking about businessmen who make money and then take it and leave,” said Fakhry al-Fiqqi, a professor of economics at Cairo University and a former adviser to the International Monetary Fund. “The UAE invests in important sectors of the economy, which contributes to Egypt’s development at the end of the day.”
Apart from the ports, the telecommunications sector and tourism, the UAE has invested in a national project for the cultivation of 61,000 hectares of desert for farming. The project would economically empower thousands of small Egyptian agricultural investors and bridge the gap between food production and consumption in the country.