Egypt makes strides towards gas self-sufficiency

24 June 2018
Exploration furthers Cairo's ambitions to become a net exporter of natural gas

Robust crude prices have activated a worldwide quest for oil and gas reserves, with major exploration and production (E&P) campaigns under way on almost every continent. Egypt has become one of the latest countries to dive into the E&P tide by launching its latest oil and gas licensing round in May.

Cairo has offered 27 exploration blocks to upstream players in its sixth licensing exercise since 2013, of which 16 blocks are thought to contain natural gas reserves. State-run Egyptian Natural Gas Holding Company, which is managing the licensing process, claims the gas blocks contain “significant hydrocarbon potential”. And there is good reason to believe this is the case.

Geological studies and legacy data suggest significant shale gas reserves lie trapped in sandstone formations in Egypt’s Mediterranean waters, resources that Cairo has been slow to exploit amid the political and economic turmoil since 2011. With Abdul Fattah el-Sisi’s administration concentrating on reviving the nation’s economic engine, the gas licensing round is likely to attract key E&P firms.

Thirteen of the gas blocks are located in Egypt’s east Mediterranean waters, while three are in the Nile delta. The offshore blocks are situated close to where Italian energy major Eni found the giant Zohr gas field in 2015 – a discovery that has since transformed Egypt’s energy fortunes. The prospect of considerable gas reserves is further bolstered by Eni’s announcement of the Calypso gas field off Cyprus earlier this year – the second giant discovery in the vicinity.

With the Zohr gas project expected to reach optimum output next year, and the likelihood of financially recoverable gas finds in the offered blocks, Egypt’s goal of achieving gas self-sufficiency and eventually establishing itself as an exporter is likely to be realised.

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