Tarek El-Molla, Egypt’s minister of Petroleum, was present at the signing ceremony of two agreements pertaining to oil exploration and production in the Gulf of Suez. The signing ceremony involved the Directors and Chairmen of a consortium comprising ADES Holding Co. (Saudi Arabia), Gharib Integrated Oil Services Co. (Egypt), SUCO Oil Company (Egypt), and OSOCO Oil Company (Egypt).
These agreements were the result of the first international bidding process launched by the Egyptian General Petroleum Corporation in September 2023, specifically targeting the Gulf of Suez. Furthermore, a total of 23 new areas were included in the bidding process, with ten in the Western Desert, two in the Eastern Desert, seven in the Suez Gulf area, and four in the Red Sea.
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The primary objectives of these deals, as highlighted by El-Molla, are to optimize the utilization of oil fields, increase production rates, enhance economic performance, and reduce import costs.
Agreement duration, extension option
Under the terms of the agreement, which has a duration of 10 years and the option for a 10-year extension, the company will have the opportunity to benefit from additional production returns through a mutually agreed mechanism.
Within the first three years of the agreement, ADES intends to invest SAR112.5 million ($30 million) in the fields operated by Suez Oil Company (SUCO) and SAR135 million ($36 million) in the fields associated with Offshore Shukeir Oil Company Co. (OSOKO). These investments are aimed at achieving an increase in production rates.
The size and timing of the investment payments will further be tied to the levels of production rate growth. The Alliance’s share of the production increase will range from 61 percent to 72 percent, depending on the total oil production. Additionally, the specific share will be determined based on the indicative market price per barrel, as disclosed.
International bidding processes in 2024
Looking ahead to 2024, Egypt plans to initiate new international bidding processes for the exploration of oil, natural gas, and gold. Additionally, the country is actively pursuing measures to strengthen its petroleum resources, tap into untapped potentials, and enhance energy production.
El-Molla further mentioned that Egypt’s state-owned oil companies are ready to invest more than EGP23 billion ($481.18 million) in the upcoming fiscal year 2024/2025, starting in July. Also, for the current fiscal year 2023/2024, ending in June, Egypt has raised its projected total investments in oil and natural gas to EGP277 billion ($5.79 billion).
Over the past five years, Egypt’s petroleum sector has collaborated with international companies to drill 576 new exploratory natural gas wells and has made 289 discoveries in gas and petroleum reserves. Moreover, by 2025, Egypt aims to dig 35 new exploratory natural gas wells in the Mediterranean and the Nile Delta, with an estimated cost of $1.8 billion.
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