Oil Ministry wants to see gas production rise by 400-500 mn cubic feet per day by March

Egypt has big domestic energy production targets to meet in 2025: The Oil Ministry is aiming to increase gas production by 400-500 mn cubic feet per day by March 2025, a senior government source told EnterpriseAM. This comes on the back of recently-introduced oil and gas incentives and the regular payment of dues to foreign partners.

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By the numbers: Egypt currently produces 4.3 bn cubic feet per day, alongside 900 mn cubic feet per day of imported gas, our source said, against demand of more than 6 bn cubic feet per day. The Oil Ministry wants to see local rise to the point that it’s forced to import just four shipments monthly. Electricity is the largest consumer of gas, accounting for 58% of annual consumption and peaking at 87% at the peak of last summer.

What’s driving the growth? Some foreign companies have ramped up investment since October, the source tells us. That’s after Oil Minister Karim Badawi led an outreach drive to listen to industry complaints — and began addressing overdue payments to some producers. The Oil Ministry wants to see 46 new exploration wells drilled in the current fiscal year, with investments amounting to USD 748.5 mn, according to one domestic report.

LNG imports are still part of the plan: After figuring out how much domestic production will increase, the government will launch an international tender to procure additional gas shipments early next year to reduce the risk of electricity outages, the source said.

Also in the cards: The Madbouly government has been 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. The measures include increasing production sharing ratios with foreign companies in exchange for new investments, enhancing exploration efforts, and increasing extraction rates.

Despite energy price hikes, the cost of energy subsidies is expected to jump once again: Egypt’s oil subsidy bill for the current fiscal year is expected to surpass EGP 200 bn, significantly higher than the EGP 154 bn initially allocated, the source told us. A weakening EGP and growing demand will drive up the cost of imports despite favorable global petroleum product prices.