Egypt sets its cap on attracting multibillion-dollar oil & gas investment while adding more renewables to its energy mix

Faced with the double energy challenge of ensuring the security of supply and taking steps to switch to more sustainable sources, Egypt is determined to stimulate investment in hydrocarbon exploration and field development to drill 586 oil and gas wells by 2030 while also pursuing opportunities in scaling up renewable energy deployment to bring further green power to its electricity grid.  

During a meeting with a delegation of senior officials from Italy’s Eni, said to be the largest investor in Egypt’s energy sector, the country’s Minister of Petroleum and Mineral Resources, discussed on July 8 methods of enhancing cooperation and partnership to increase production, develop oil and gas resources, ensure energy efficiency, and achieve carbon emissions reductions, which are considered to be top priorities of the Egyptian economy.

A few days later, Karim Badawi, Egypt’s Minister of Petroleum and Mineral Resources, delivered a statement before the parliamentary committee responsible for reviewing and discussing the new government’s program. He emphasized plans to encourage partners to inject more funds into increasing the production of crude oil and gas and finding incentive mechanisms to accelerate hydrocarbon exploration programs, in addition to maximizing the benefit of digital transformation and artificial intelligence technologies in various aspects of the energy sector.

While pointing out how the rise in global exploration and development activities leads to a jump in demand for offshore drilling rigs, equipment required for exploration activities, and intense competition, Egypt’s Minister of Petroleum and Mineral Resources emphasizes the 145 commitment agreements in the oil and gas exploration and research arena concluded with 40 partners. Recently, QatarEnergy sealed a deal with ExxonMobil to enter two exploration blocks off the coast of Egypt.

According to Badawi, 110 oil and gas exploration wells are expected to be drilled during the fiscal year 2024/2025, requiring total investments of $1.2 billion. Aside from this, the drilling of 586 exploration wells, amounting to $7.2 billion, is on the agenda until 2030. He also noted that studies were underway to add another floating storage and regasification unit (FSRU) in Ain Sokhna, potentially using the current liquefaction facilities in Damietta and Idku regions in reverse.

To tackle the challenges in exploration activity, the country’s Minister of Petroleum and Mineral Resources disclosed plans to set new incentives for current and future opportunities, including unconventional reservoirs, preparing a global marketing plan to attract new investments, and launching global bids through the Egypt Exploration and Production Portal, which focuses on making data available digitally at all times to partners and continuing to offer new areas to international companies with a new methodology. 

In line with the objectives of the sub-program for the development and advancement of the petrochemical industry, Badawi acknowledged plans to bolster Egypt’s exports of petroleum products resulting from refining and petrochemical projects to curb the trade balance deficit and bring the value of exports to $8.6 billion.

With the widening of the financing gap, driven by the rise in global prices, the movement of the exchange rate, and the decrease in the selling price for all sectors and consumers compared to the cost, came a large deficit in the balance of payments in the petroleum sector. A few months ago, BP and ADNOC established a new joint venture (JV), initially focused on developing gas assets in Egypt.

Egypt’s Minister of Petroleum and Mineral Resources intends to rationalize consumption to the greatest possible extent, increase the efficiency of the production system to reduce the cost of producing a barrel, create a sustainable investment environment for partners and investors in the sector, and work with the government to reach fair prices for selling petroleum products to overcome the challenges. 

Furthermore, the country is also set on implementing green economy projects, including the production of green ammonia, bioethanol, medium-density fiberboard (MDF) from rice straw, and sustainable aviation fuel (SAF) from used cooking oil, in addition to projects to improve energy efficiency and slash carbon to cut emissions by 2.5 million tons annually in 2030, at an investment cost of $2 billion.

With this at the forefront, work is underway to address the obstacles in establishing these projects by strengthening cooperation ties with all parties to provide funding available from financing institutions and international bodies for the benefit of developing countries to bring green projects online and reduce emissions, while searching for non-traditional sources of financing for projects such as carbon certificates.     

“I fully appreciate the weight of responsibility placed upon me, as well as the aspirations of the Egyptian people for the petroleum and mineral wealth sector to meet the needs of citizens and various state sectors for energy. Energy is the lifeblood of daily life and the engine of development in Egypt in all its aspects, contributing to the achievement of Egypt’s Vision 2030,” Badawi stated.

While claiming that the future of Egypt’s energy industry lies in the renewable energy portfolio, Dr. Mustafa Madbouli, the country’s Prime Minister, underscored the importance of researching ways to bring online as much renewable power as possible to the electrical grid, alongside coordination on the localization of industries related to renewable energies, such as solar panels or wind power, and vice versa.

In light of this, Dr. Madbouli agreed with Dr. Sultan Jaber, the UAE’s Minister of Industry and Advanced Technology, to formulate “a very ambitious plan” to add more new and renewable energy to the grid. Egypt and the UAE will cooperate to add 4 GW of renewable energy to the grid from next summer.

In pursuit of clean energy, the Egyptian government inked seven memoranda of understanding (MoU) in March 2024 with international developers to set up green hydrogen and renewable energy projects in the Suez Canal Economic Zone (SCZONE).

These agreements added expected investments, for the pilot phase, of about $12 billion, in addition to around $29 billion for the first phase, lifting the total amount to approximately $40 billion within ten years.

As part of the partnership signed by the EU and Egypt in March 2024, a set of deals, worth €40 billion for renewable energy and hydrogen among others, were concluded during the EU-Egypt Investment Conference on June 29-30.