Egypt awards 12 concessions in one of its largest licensing rounds

ExxonMobil, Shell among international players joining race to develop Egypt's hydrocarbon resources

Import of gas from Egypt will begin mid-year, said Mr El Molla. Satish Kumar / The National

Egypt awarded Shell, ExxonMobil as well as Eni, oil and gas blocks in one of its biggest ever licensing rounds as North Africa's largest economy vies to leverage recent large discoveries off the Mediterranean to become an energy exporter.

US major Exxon will join the race to develop Egypt’s hydrocarbons resources for the first time, while Shell won the most number of blocks in the round - three for oil and two for gas.

“[It's] important for other players in the market [to know] that they’re not alone. That others interested to come,” Egypt’s petroleum minister Tarek El Molla told an energy conference in Cairo.

Egypt, the Arab world’s most populous state struck gold in recent years thanks to the discovery of the massive Zohr field by Italian energy major Eni in 2016 in the Eastern Mediterranean. The find sparked search for more hydrocarbon resources along the Nile Delta and western desert as the North African state looked to leverage these discoveries to become a net exporter of gas, particularly to markets in Europe.

Ramp-up of gas production in Egypt has proven successful, with the country ending its import of liquefied natural gas cargoes last year and looking to boost capacity at its LNG terminal as it looks to become an exporter. Investment of around $750 million to $800m will be expected in the initial stage of exploration for the 12 concessions announced, said Mr El Molla.

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Five of the blocks were for gas exploration and were awarded to Shell, Exxon Mobil, Malaysia’s Petronas, BP, Germany’s DEA as well as Eni. Around 20 wells be drilled in these concessions, according to the head of Egypt’s state gas board.

Oil exploration blocks went to Neptune Energy, Merlon, Shell, Eni as well as state-owned Egyptian General Petroleum Corporation that were awarded seven concessions in which 39 wells will be drilled, according to a statement by the country’s petroleum ministry.

Following the award of exploration licenses to concessions in the western and eastern desert regions, the Nile Delta as well as the Gulf of Suez, Egypt will look to launch a new round that includes blocks in the Red Sea, according to the chief executive of EGPC.

"Red Sea exploration will be part of a new bid round, which will be launched very soon. This year, definitely," Abed Ezz El Regal told The National in an interview.

Egypt will look to incentivise exploration in the Red Sea area, which is expected to include unconventional resources.

The North African country will this year see production from its Zohr resource increase to more than 3 billion cubic feet per day. The country will also ramp up output from the North Alexandria West Nile Delta concessions operated by BP in April. Production is expected to reach 700 million cubic feet per day with the coming on stream of 400 million cubic feet per day, he said.