FEATURE: Egypt buoyed by new upstream work amid flagging gas production

With its gas production at a near eight-year low, Egypt's government has committed to driving renewed upstream work in its offshore as part of efforts to raise output.

And the efforts appear now to be paying off, with a handful of international companies working to boost production through new wells and development work in the country.

Egypt's relatively new energy minister Karim Badawi -- who took over the post from long-time minister Tarek el-Molla in July last year -- has been particularly active in looking to spur new upstream momentum.

Egypt's gas production totaled just 3.85 Bcm in October 2024, according to the latest data published by the Joint Organisations Data Initiative.

That is the lowest monthly production level since February 2017 and well down on a recent peak of 6.1 Bcm in March 2021.

Egypt switched from being an LNG exporter to an importer last summer to offset falling domestic production.

In October, it imported some 649 million cu m as LNG and a further 808 million cu m as pipeline gas from Israel to help meet demand of 5.27 Bcm.

Egypt deployed a floating LNG import vessel last summer at Ain Sokhna, with imports beginning in June.

It plans to deploy a second FSRU at Ain Sokhna under an agreement between state-owned EGAS and US LNG company New Fortress Energy in the second half of 2025 in light of increasing gas demand, especially in the summer months.

Upstream work

While looking to ensure gas supply security through LNG imports, the Egyptian government has also pledged to return gas production levels to normal from June this year.

Italy's Eni -- which operates Egypt's supergiant Zohr field -- is set to begin new drilling work soon.

"Eni is preparing to resume drilling in the Zohr gas field in the Eastern Mediterranean," a company spokesperson said Jan. 13.

"The drilling vessel Saipem 10000 is completing operations and is scheduled to move to Egypt in the coming weeks where it will begin a drilling campaign with the aim of increasing gas production," the spokesperson said.

Eni said in October last year that it was looking to boost activity at Zohr against a background of an improved situation in Egypt where the country was providing more reliable payments to producers.

Other IOCs are also active. The ministry said Jan. 12 that BP had also completed two new wells at the Raven field in the Mediterranean.

In a statement, it said work was now being carried out to connect the wells to existing production networks in order to begin production operations.

"It is expected that gas production from the two new wells will start in February 2025, three months ahead of schedule, thanks to the plan to accelerate drilling operations," it said.

BP -- which could not be reached for additional comment -- began production at Raven in 2021.

At the time, BP said Raven -- which was the third piece in the major West Nile Delta project -- had the potential to produce 900 MMcf/d of gas.

Egypt's energy ministry also said BP was set to carry out more drilling in the coming weeks close to existing WND infrastructure.

The ministry said the new exploration work was part of its efforts to promote offshore gas development work, pointing also to new wells from US majors Chevron and ExxonMobil in the Egyptian offshore.

LNG options

Egypt was a fairly stable exporter of LNG and pipeline gas before its domestic output slumped due to a slowdown in investment following the Arab Spring in 2011.

It began importing LNG in April 2015 to fill a growing gap between supply and demand, but halted imports in 2018 after the Zohr field came online.

However, it turned to LNG imports again to meet demand last summer, with exports suspended at a time when spot LNG prices remained relatively high.

Prices are still high, with Platts, part of S&P Global Commodity Insights, assessing the DES Mediterranean marker on Jan. 13 at $14.24/MMBtu.

Egypt is also still keen on using Cypriot gas as feedstock for its LNG export facilities.

Gas from a number of undeveloped fields offshore Cyprus -- including Aphrodite and Cronos -- could be piped to Egypt for onward supply to international markets as LNG.

In a summit held Jan. 8 in Cairo between officials from Egypt, Greece and Cyprus, Badawi said enhancing cooperation between the three countries was key to achieving the "best exploitation" of their gas potential.

He said the three could collaborate to find the best solutions for developing their gas resources "especially in light of the large global demand for gas".

In particular, Badawi said the ministry has worked in recent months to accelerate the pace of activating regional cooperation with Cyprus so that Cypriot gas can be exported as LNG from Egypt's existing facilities.

"Cyprus does not have the infrastructure that is available in Egypt," Badawi said.

In October, Badawi signaled the possibility of expanding the capacity of the two-train Idku LNG export plant following talks with his Cypriot counterpart George Papanastasiou.

Idku -- which started up in 2005 -- currently has two LNG production trains with a total production capacity of 7.2 million mt/year or about 120 shipments.

"There is scope for expansion and the possibility of adding new LNG production units," the ministry said.