Oil & gas sector in Egypt
The Egyptian Ministry of Petroleum controls the industry through its various arms: Egyptian General Petroleum Corporation (EGPC) acts as a controller for the industry; it governs all oil production and activities across Egypt except Upper Egypt. It operates in partnership with various international oil companies (IOCs), and alone accounting for almost 20% of the country’s oil output. Egyptian Natural Gas Holding Company (EGAS) manages investments in the exploration and production of Natural Gas. Egyptian Petrochemical Holding Company (ECHEM) controls the emerging petrochemical industry. Ganoub El Wadi Petroleum Company (Ganope) promotes the recently exploited developments in Upper Egypt.
After the recent natural gas discoveries, natural gas proven reserves rose to 2.2 trillion cubic metres (tcm) while oil reserves reached 4.4billion bbl in 2012. Both figures are expected to decrease in 5 years time to reach around 2.2tcm natural gas and 3.8bn bbl oil. Gas production is 61.1 cubic metres (bcm) expected to reach 82.1bcm per year by 2021. While oil production is expected to decline from 713.700 barrels per day (b/d) in 2012 to 648,300b/d in 2021
Downstream is booming. Egypt has Africa’s largest refining sector with nine refineries at a capacity of 726,300b/d. Capacity is set to expand still further, with three new refinery projects currently being studied. It is expected that these would together provide an additional 930,000b/d.
Egypt plays an important role in transportation; in addition to the Suez Canal, Sumed pipeline carries crude 322km from AinSoukha on the Red Sea to the SidiKerir terminal on the Mediterranean (capacity: 2.5mn b/d). It is used by very large crude carriers unable to pass through the canal fully loaded. Egypt has two LNG plants operating three LNG trains with a total capacity of 12.2 mtpa. Egypt also exports gas via pipeline to Jordan, Syria and Lebanon.
Egypt is a significant market for UK exporters of oil & gas products and services due to the current & anticipated high levels of investment in the sector. Prospects of further large reserves of gas and a need for economic growth to match the high population growth (over 85 million in 2012 and expected to double in 25 years) ensure that this market represents long-term business prospects.
Opportunities exist in most aspects of activities:
New Oil Refinery & Petrochemical Complex in Port Said; $9bn investment over 5 years
Develop & Upgrade the Lube-Oil Complex in Suez; $50m investment over 2 years
New Unit for Producing Medical Oil in Amreya, Alexandria; $13m over 3 years
Construction of a plant for Producing Paraffin Wax; estimated budget $46m over 3 years
Pipelines for pumping crude oil & condenses from production locations to refineries in Alexandria; budget $9m over 2 years
Construction of 2 new refineries near the Suez Canal and Ain Sokhna on the Red Sea. Capacity 500,000 and 130,000 barrels/day respectively; total investment $3.4bn over 2 years
A secondary processing plant in Mostorod will follow; $3.7bn PPP investment, to start operations by end 2014
EGAS will launch a tender by end of 2013 for a new Gas exploration concession; expected tender value $400m
Investment by Apache during the first half of 2013 reached $550m; several £bn investments planned by UK IOCs over the next 3-5 years
UK exploration company is taking over a concession in Egypt; planned investment £300m over the next 5 years
Getting into the market
There is no statutory requirement in the oil and gas sector that foreign firms tendering for the supply of goods and services should go through registered Egyptian agents. It is, nevertheless, advisable to appoint active and well-connected agents to register their products with the relevant authorities, provide local back-up services, chase applications, help in information gathering and generally ensure that their principals’ interests are adequately safeguarded.
British companies offering goods or services to this sector and willing to do business in Egypt are advised to present their credentials and register with EGPC and/or EGAS directly or through their agent/facilitators in order to be to be invited / pre-qualified to bid on contracts.
One unique aspect of the industry is the joint venture operating system, whereby upon declaration of commercial discovery, EGPC joins hands with the relevant IOC to form a joint venture operating company. This new entity’s top management is equally staffed by employees from both companies and joint approval is required for all decisions and operations.
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits though our chargeable Overseas Market Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists in country – or contact your local international trade team.
Sonia El Kattan, Senior Adviser, Trade & Investment, British Embassy Cairo. Tel: +202 2791 6000 or email: email@example.com
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows.
Mediterranean Offshore Conference (MOC)
Abu Dhabi International Petroleum Exhibition & Conference (Adipec)
10-13 November 2013 – Abu Dhabi