Egypt’s energy sector set to attract $8bn in coming fiscal year, minister says

Rising presence of Gulf companies in sector reflects 'positive investment climate', petroleum minister Tarek El Molla says

Egypt's Minister of Petroleum and Mineral Resources Tarek El Molla speaking at an event in Cairo. Nada El Sawy / The National

Egypt's energy sector expects to attract $8 billion in foreign investment in the coming fiscal year as the country looks to boost its natural gas production.

The investments will be allocated to developmental and operational activities in the oil and gas sector, Tarek El Molla, the country's petroleum and mineral resources minister, told reporters on the sidelines of the Opec Seminar on Thursday.

“While the bidding processes are still under way, we have identified areas where we can assess the level of commitment from the companies,” Mr El Molla said.

Egypt’s exports of natural gas reached $8.4 billion in 2022, up 171 per cent from a year earlier, as an energy crisis in Europe drove up demand for the fuel.

In December, Egypt discovered a large gasfield off its north-eastern Mediterranean coastline, with potential reserves of 3.5 trillion cubic feet of gas.

The find was in Nargis, one of four offshore exploration blocks in which US oil company Chevron holds operating interests along with Egypt’s Tharwa Petroleum Co.

“Being involved in the discovery … especially in offshore areas such as the Mediterranean Sea and the Red Sea, presents significant opportunities,” Mr El Molla said.

“With access to the necessary resources, we are well-equipped to carry out excavations and capitalise on these valuable findings."

Last year, Qatar Energy signed an agreement with ExxonMobil to pick up a 40 per cent stake in the North Marakia Offshore Block in the Mediterranean Sea.

In February, Adnoc Distribution, the UAE’s largest fuel and convenience retailer, completed the acquisition of a 50 per cent stake in TotalEnergies Egypt, marking the Abu Dhabi company's entry into Egypt.

In 2021, Egypt awarded an oil and gas exploration concession in the Red Sea Block 4 to Abu Dhabi's Mubadala Energy.

“It's great to see the increasing presence of Gulf companies in the Egyptian market,” Mr El Molla said.

“The fact that many Arab and Gulf companies are now working in Egypt reflects a positive investment climate. These companies [have] expressed their desire to expand their investments further."

Earlier this week, Mr El Molla said Egypt had offshore exploration plans worth $1.8 billion to drill new gas wells in the Mediterranean Sea and the Nile Delta.

The programme, which involves major international companies such as Eni, Chevron and BP, aims to drill 35 exploratory gas wells from now until July 2025, with 21 planned for the 2023/24 fiscal year and 14 for 2024/25, he said in an interview with the Emirates News Agency.

The country aims to increase the share of renewable energy in its electricity production to 42 per cent by 2030.

"So far, the idea is to have more gas production and decarbonise existing operations," Mr El Molla said during a panel session earlier.

Egypt, the Arab world’s third largest economy, is suffering from a dollar crunch that is suppressing imports and hurting local industries dependent on foreign materials.

The International Monetary Fund has urged the country to adopt a flexible foreign exchange regime in return for financial assistance from the Washington-based lender.

In January, the fund agreed to give Egypt a $3 billion loan to shore up its finances.

The IMF's conditions included a reduction of the state's footprint in the economy, allowing the private sector a larger role and the adoption of a flexible foreign exchange system that leaves demand and supply to determine the value of the Egyptian pound.