{"id":623882,"date":"2024-06-12T00:00:00","date_gmt":"2024-06-12T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/egypt-lining-up-oil-tenders-development-projects-to-bolster-energy-security\/"},"modified":"2024-06-12T00:00:00","modified_gmt":"2024-06-12T00:00:00","slug":"egypt-lining-up-oil-tenders-development-projects-to-bolster-energy-security","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/egypt-lining-up-oil-tenders-development-projects-to-bolster-energy-security\/","title":{"rendered":"Egypt lining up oil tenders, development projects to bolster energy security"},"content":{"rendered":"

Egypt double<\/strong>s down on oil projects to boost energy security:<\/strong> A shortage of petroleum products \u2014 including a steep <\/a>decline in natural gas output<\/a> \u2014 has prompted the government to resume imports of LNG<\/a>, seek investments in oil and gas exploration, and accelerate oilfield development projects in a bid to meet local energy needs and boost energy security.<\/p>\n

** Tap or click the headline above to read this story<\/strong> with all of the links to our background and outside sources.<\/p>\n

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ON THE EXPLORATION AND DEVELOPMENT FRONT-<\/p>\n

Exploration tenders still on the table despite setbacks: <\/strong>The state-run Egyptian General Petroleum Corporation (EGPC) has been working on launching 10-12 international oil and gas exploration tenders, with priority given to areas in the Red Sea, South Valley, and southern Egypt, our source said. However, delayed arrears to international oil companies have forced the EGPC to push back the offerings after they were initially slated to be launched in succession, with the last one offered by the end of June 2024, the source added.<\/p>\n

Remember: <\/strong>The government began paying back nearly 20% of the arrears<\/a> it owes to international oil companies in March, with a structured plan in place to clear the remaining debt in stages.<\/p>\n

Several development projects could also be up for grabs:<\/strong> The government could offer a number of oilfield development projects that would reel in EGP 59 bn worth of investments, our source said. These include the southern Gulf of Suez\u2019s Hilal offshore field, a project in West Borollos, the tenth phase of the West Delta Deep Marine, and the third phase of the North Sinai fields.<\/p>\n

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WHAT\u2019S BEEN ACHIEVED IN THE PAST TEN YEARS?<\/p>\n

A lay of the land: <\/strong>Egypt allocated around EGP 1.2 tn to investments in the oil and mineral resources sector between July 2014 and June 2023 \u2014 with EGP 844.2 bn going to completed projects and EGP 344 bn to projects underway \u2014 according to a November 2023-dated report that was seen by Enterprise. The government is also mulling projects worth EGP 138 bn, the report .<\/p>\n

Dozens of storage facilities for fossil fuels were built during the period,<\/strong> according to the report. In Sohag and Cairo, 12 tanks were built with a combined capacity of 32.5k tons, costing EGP 670 mn. While in Alexandria and Assuit, 10 spherical tanks were built with a total storage capacity of 10.9k tons, costing EGP 220 mn. Suez saw 12 new tanks being built with a total storage capacity of 276k tons, costing EGP 7.1 bn. Nearby in Ain Sokhna, 6 tanks were built with a total capacity of 165k tons, costing EGP 4.1 bn.<\/p>\n

Egypt\u2019s oil production between July 2014 and December 2022 totaled 635 mn tons<\/strong>, the report stated.<\/p>\n

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WHY ARE STORAGE FACILITIES IMPORTANT?<\/p>\n

Egypt expanded its oil storage capacity:<\/strong> The government increased its oil storage capacity by 60% to about 5 mn tons between July 2014 and December 2022, with investments of EGP 23.1 bn.<\/p>\n

Storage facilities help cut costs by hedging against price volatility:<\/strong> Storage facilities have enabled the government to build strategic reserves before the prices of oil hit multi-year highs of over USD 100 per barrel in 2022, sources in the oil sector told us. Purchased at lower prices, these stockpiles have helped counteract the rising cost of subsidies and put a lid on oil imports, our sources added.<\/p>\n

Gov\u2019t renewed hedging contracts: <\/strong>Surging oil prices have been posing a major headwind for the oil sector, prompting the government to renew hedging contracts for roughly 30% of the country's oil imports, government sources told us.<\/p>\n

Remember: <\/strong>The value of Egypt\u2019s oil imports dropped 7.8% y-o-y in 2H 2023 to USD 6.3 bn, according to the central bank figures (pdf)<\/a>. Meanwhile, oil exports fell 62.7% y-o-y to USD 3.2 bn.<\/p>\n

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