Oil and Natural Gas in Egypt

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Though Egypt’s net exports of crude oil and petroleum products have declined in recent years, higher prices on world markets have pushed Egypt's oil revenues upward. The country also began exports of liquefied natural gas (LNG) in January 2005, adding to its hydrocarbon revenues.
According to the Oil and Gas Journal, Egypt’s estimated proven oil reserves stand at 3.7 billon barrels, or 0.3 percent of world reserves, while crude oil production averaged 579,000 bbl/d in 2005, less than 1 percent of world production. Egypt is hoping that exploration activity, particularly in new areas, will discover sufficient oil in the coming years to slow recent annual declines in output. Egyptian oil production comes from four main areas: the Gulf of Suez (about 50 percent), the Western Desert, the Eastern Desert, and the Sinai Peninsula.

• Oil production: 700,000 bbl/day (2005 est.)
• Oil exports: 134,000 bbl/day (2004 est.)
• Oil proved reserves: 2.6 billion bbl (2006 est.)

• Natural gas production: 32.56 billion cu m (2004 est.)
• Natural gas exports: 1.1 billion cu m (2004 est.)
• Natural gas proved reserves: 1.657 trillion cu m (1 January 2005 est.)

• Oil from the Gulf of Suez basin is produced mainly by Gupco (Gulf of Suez Petroleum Company) under a Production Sharing Agreement (PSA) between BP and the Egyptian General Petroleum Corporation (EGPC). Production in the Gupco fields, with most wells in operation since the 1960s and 1970s, has fallen in recent years. Gupco is attempting to slow the natural decline in its fields through significant investments in enhanced oil recovery (EOR) as well as in increased exploration. In May 2003, BP announced a large new find, the Saqqara field, which represents the largest new crude oil discovery in Egypt since 1989. Located offshore adjacent to the existing El-Morgan field, it is expected to begin commercial production in 2007. With estimated peak production of around 40,000 to 50,000 bbl/d this find may stem the decline in overall Gulf of Suez production.

• Egypt's second largest oil producer is Petrobel, which is a joint venture between EGPC and Eni of Italy. Petrobel operates the Belayim fields near the Gulf of Suez and also is undertaking an EOR program to stem declining production. A joint venture between EGPC and Eni also is producing about 40,000 bbl/d from an area in the Qattara Depression in the Western Desert, in the Meleiha and West Razzaq blocks.

• Other major companies in the Egyptian oil industry include Badr el-Din Petroleum Company (EGPC and Shell); Suez Oil Company (EGPC and Deminex); and El Zaafarana Oil Company (EGPC and British Gas).
  

• Egypt's overall oil production has been declining more slowly than in the Gulf of Suez fields, due to new output from independent producers like Apache Corporation and Seagull Energy Corporation at smaller fields, especially in the Western Desert and Upper Egypt. Since 2000, Western Desert production has risen substantially, accounting for roughly 27 percent of total oil production, more than double 2000 levels. Of additional significance is that oil in this area is on average cheaper to produce and lighter than other domestic crudes. Apache and Seagull also have developed the Wadi El-Sahl field in the South Hurghada block, which is producing around 20,000 bbl/d. Khalda Petroleum, a joint venture between Apache and EGPC, produces around 50,000 bbl/d in the Western Desert in the Khalda and East Bahariyya areas.

• Firms are beginning to explore offshore oil production possibilities in the Mediterranean. The largest concession was awarded to Shell in February 1999 for a large deepwater area off Egypt's Mediterranean coast. Shell reportedly is optimistic about the prospects for its North East Mediterranean Deepwater (NEMED) concession, but drilling so far has yielded natural gas rather than significant quantities of oil.

• BP and Total also were awarded a large offshore block from the same bidding round.
  

• A smaller offshore concession was awarded to Eni. While most offshore discoveries in the Nile Delta have been natural gas, it is believed that there may also be significant quantities of oil in the area.
  

• EGPC awarded five exploration contracts in July 2004 to a newly-formed, state-owned upstream oil firm, Tharwa Oil. Four of the five concessions cover unexplored areas of the Western Desert, with the fifth covering an offshore block in the Mediterranean.
  

• Burren Energy of the UK also was awarded two blocks in the Gulf of Suez under the 2004 licensing round, which closed in January 2005. Other awards under the 2004 licensing round are still pending.