Fresh oil and gas incentive package aims to boost foreign investment in the sector: The government is currently in talks with foreign partners over a new set of incentives for the oil and gas industry that aim to boost oil and gas production and reduce the growing gap between energy supply and demand, a government source told Enterprise.

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The details: The measures include increasing production sharing ratios with foreign companies in exchange for new investments, enhancing exploration efforts, and increasing extraction rates. The move aims to push foreign partners to invest more and boost Egypt’s oil and gas production.

We saw this coming: We first heard that Oil Minister Karim Badawi would be meeting with foreign energy players about increasing local production back in late August, with the ministry announcing that it would be rolling out a new package of incentives to ramp up output days later.

Remember: The government set aside USD 1.2 bn for energy imports summer of 2024 to help fill a supply gap and put a temporary end to blackouts during the hottest months of the year. After becoming a net exporter of LNG in 2018 and signaling its intention to become an important energy exporter to the region and Europe, production falls and rising domestic demand led to Egypt having to ramp up imports to bridge the supply gap.

Clearing arrears to foreign oil and gas players plays a big role in boosting foreign investments in the sector. The government is adhering to its schedule for paying arrears to foreign companies — a process that has already seen the government pay up over USD 2.8 bn in arrears since the float of the EGP in March. Further payments are to follow, the source said.

Where negotiations stand: The source noted that while each agreement will be considered on a case-by-case basis, players share a desire to boost foreign investments across the board.

DATA POINT- The private sector accounts for around 84% of the total investments in the sector, while public investments cover the remaining 16%.

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