Egypt awarded US oil major Chevron, Anglo-Dutch Shell and Abu Dhabi’s Mubadala rights to explore for oil and gas in the Red Sea, as it expands its search for new hydrocarbon reserves.
The North African state, which launched its first licensing round in the Red Sea earlier this year, awarded one block each to Chevron and Shell and the third jointly to the Anglo-Dutch firm and Mubadala. The concessions cover a total acreage of 10,000 square kilometres, with a minimum investment of $326 million, according to the country’s petroleum ministry.
Egypt, the Arab world’s most populous state, has been offering exploration rights following the discovery of the massive Zohr field by Italian energy major Eni in 2016. The find sparked a search for more hydrocarbon resources along the Nile Delta and western desert as the country looks to to become a net exporter of gas, particularly to markets in Europe.
Following the award of exploration licences to concessions in the western and eastern desert regions, the Nile Delta and the Gulf of Suez, Egypt announced its intention to launch another round that included blocks in the Red Sea.
The country in February tendered 10 blocks offshore the Red Sea, aiming to replicate the gas bonanza, which helped Egypt drastically reduce its fuel imports.
Earlier this year, Egypt also successfully closed one of its largest bid rounds, awarding 12 licences to companies including US energy major Exxon Mobil.
Egypt’s Minister of Petroleum and Mineral Resources Tarek Al Molla said that Egypt’s first start in the exploitation of oil wealth in its Red Sea economic waters comes from strong political will. The signing of the agreement to demarcate the maritime borders between Egypt and Saudi Arabia allowed the petroleum sector to launch the first international bid in the Red Sea region, Molla explained.
The minister said that these bids from the largest international companies in the oil field is an important indicator of Egypt’s attractive investment climate.
These companies possess the latest global technologies and accumulated experience to work in pristine areas such as the Red Sea, Molla added, which features challenges such as water depth and the large volume of investments needed for exploration and development.
Khaled Kacem, Vice President and Country Chair of Shell Egypt said, “We are proud of winning the exploration acreage in the Red Sea, which fits well into Shell Egypt’s growth strategy in offshore and integrated gas businesses. We welcome the opportunity to grow our position and footprint in Egypt through the awarded concession, which will confirm Shell’s support to Egypt’s transition into a regional energy hub. Shell has a strong infrastructure position with the West Delta Deep Marine concession and Egyptian LNG facilities, as well as firm growth plans to expand its offshore production through an ambitious exploration program. We are committed to start exploration operations after final ratification.”
Shell awarded blocks cover an area of 6,141 square kilometers in an unexplored region of Egypt. The work commitment, in the first exploration phases over three years, includes acquiring over 1,000 square kilometers of 3D seismic surveys.