Table of Contents
Egypt has become one of the favorite North African destinations for foreign petroleum investment dollars. Compared with neighboring countries such as Libya and Algeria, Egypt has a much more secure and welcoming political and business climate. To make it even more attractive to foreign investors, the government has developed less restrictive terms and improved pricing structures. It has also improved the acreage acquisition process by making large exploration blocks available with a more generous time allotment to evaluate blocks prior to bidding.
More or less parallel with the countryís development into a major oil and gas producer, Egyptís economy has been moving away from a rigid, highly centralized system dominated by the public sector, toward a more decentralized market-based system with a significant private sector. However, there is strong media and public sentiment opposing further domination of the petroleum sector by foreign companies. Together with the recent upsurge in Muslim fundamentalism, this introduces an undeniable element of risk for foreign petroleum investment.
There are three major hydrocarbon-producing areas in Egypt: the Gulf of Suez, the Western Desert, and the Nile Delta Basin. Of these, the Gulf of Suez Basin accounted for 90% of the nationís 1993 output of 893,000 BOPD. The Western Desert Basin was the target of extensive exploration in the 1980ís, but results were disappointing, so that the basin accounts for a mere 10% (90,000 BOPD) of 1993 production. The Nile River Basin is gas prone, and has risen in significance in the past decade as the government has placed greater emphasis on domestic natural gas usage.
Egypt exported 37% (330,000 BBLS) of its daily oil output in 1993. It has successfully replaced oil production in past years, and with estimated reserves of 6.3 billion barrels, the country has 19.5 years of oil left. Given that domestic consumption is still surging, Egyptís ability to export is being undercut.
The future is much brighter in terms of natural gas. Based on daily production of 1.2 BCF/d in 1993, Egypt has 47 years of proven reserves. Given the high likelihood of considerable undiscovered reserves, there has been a strong push in government to substitute natural gas for oil on the domestic front. The revised Petroleum Law of 1986 was designed to encourage gas exploration and investment. It allows companies to sell gas to the Egyptian General Petroleum Company (EGPC) at a price equivalent to 85% of fuel oil. These changes bore fruit early, as natural gas and condensates accounted for 24% of total domestic energy consumption in 1992. Increased exploration has also resulted in the Nile Delta Basin, with 1993 successes being scored by AGIP, Amoco, IEGC and EGPC.
Although recent drilling exploration success rates in both the Gulf of Suez and Western Desert basins have been consistently high (30% for the former and 10.5% for the latter), the size of the remaining fields is likely to be quite small. The size-frequency distribution pattern of oilfields in the Gulf of Suez Basin suggests that, while a few fields in the 50-200 MMBBL range remain to be found, the majority will be in the 1-5 MMBBL range. The chance of finding a field greater than 200 MMBBL is quite remote. The size-frequency pattern for the Western Desert Basin suggests that additional fields are also likely to be quite small, in the 1-50 MMBBLS range. If any larger fields are found, they are likely to be in new play types outside the present areas of active exploration. Based on the increasing demand for natural gas, exploration emphasis will shift to the under-explored Nile River Basin, where fields with reserves in excess of 1 TCF are predicted to occur.
Egypt has an extensive and growing petroleum infrastructure. This includes refineries, a network of oil, gas and products pipelines, industrial, petrochemical and fertilizer plants, and oil export terminals. A 2,000 km natural gas pipeline network, the National Grid, links the four main producing areas with the main industrial and residential users.
For more information contact:
Petrel Robertson Consulting Ltd.
500, 736- 8th Avenue S.W.
Phone: (403) 218-1618
Fax: (403) 262-9135
This summary, part of Petrel Robertsonís 1995 summary of exploration and development opportunities in 31 countries around the world, has not been updated. Some of the information, particularly relating to political and economic issues, is thus out of date. It is included, however, to demonstrate the breadth and depth of Petrelís work in each of these nations.