Egypt aims to become a major energy exporter once again, signing $81.4 million in oil exploration deals with two international corporations.
Oil Minister Tarek El Molla signed the deals with Royal Dutch Shell ($35.5 million) and Apex International Energy ($45.9 million), Reuters reported last week. The deals will see the exploration of 16 new fields (comprising 1.7 million acres) in West Badr el Din and South East Meleiha.
Although Egypt formerly was a major global oil supplier, things have changed drastically over the last few years, as increasing demand at home has forced the country to become a net importer after years of being an energy exporter, Oil Price reports.
Egypt is taking more bids for exploration
Egypt’s General Authority for Petroleum also announced earlier this month that it will be taking even more bids for exploration on the other side of the country, in the Eastern Desert. All the bids are expected to happen by the end of 2017.
The nation's bid to increase exploration comes as plans to import from Arab neighbors have been complicated by regional tensions. In April 2016, Saudi Arabia's King Salman agreed to send 700,000 tons of refined oil products per month for five years under a $23 billion aid deal.
After President Abdel Fattah al-Sisi took power in Egypt, Saudi Arabia and other Gulf nations pumped billions of dollars of aid into the country's struggling economy. But, as the economy continued to worsen and Sisi remained reluctant to support the foreign policy decisions of the Gulf, tensions rose.
In October 2016, Saudi oil stopped coming. Later, in November, Egypt's Oil Ministry revealed that the kingdom had said petroleum shipments would cease "until further notice."
Egypt then went to Iraq, making an agreement at the end of December to receive one million barrels of oil per day. Following the announcement of the Iraqi deal, rumors swirled that Egypt would also seek oil from Iran.
Egypt will also drastically increase its natural gas output
In an effort to further develop itself as a major energy player, Egypt also plans to drastically increase its output of natural gas. The country's natural gas output is expected to increase by 50 percent next year and by 100 percent in 2020.
Egypt may also be trying to challenge Qatari dominance of the natural gas market. Saudi Arabia, Bahrain, the UAE, and Egypt have all boycotted Qatar economically and diplomatically since June, accusing the Gulf nation of supporting terrorism.
As Egypt's economy has struggled significantly since 2011, oil and gas could provide a major boost and economic relief. According to a report from UAE-based Renaissance Capital, more than half of the $4.1 billion in direct investment in Egypt in the fourth quarter of 2016 went to the oil and gas sector.
This demonstrates that international investors see serious potential in Egypt's oil and gas future. Time will show whether its enough to address the country's economic woes.