Egypt Awards Oil Majors First Red Sea Blocks
The Arab world’s most populous country has awarded a string of concessions in a bid to become the region’s next major supplier of natural gas.
Egypt announced this week that it has awarded several exploration blocks to four of the world’s oil majors in both its Mediterranean and Red Sea territorial waters.
Chevron, Shell, and a joint-venture between Shell and the UAE’s Mubadala operating company were each awarded blocks in the Egyptian Red Sea. The total exploration area covers more than 3,800 sq mi. and is believed to hold promising gas reservoirs. Egypt’s petroleum ministry said that the minimum investment value of these blocks is around $326 million.
This is the first time that Egypt has licensed exploration areas in the Red Sea. The awards follow diplomatic efforts with Saudi Arabia to demarcate the two country’s respective maritime borders in the Red Sea, which allowed the international tendering process to move forward.
The auction included a total of 10 blocks, which accounted for more than half of Egypt’s maritime shelf. Chevron and Shell’s blocks are in the northern area of the Red Sea. No winning bids were submitted for the seven additional blocks.
In a separate tendering, ExxonMobil was awarded rights to two exploration blocks spanning a combined 2,600 sq mi. in Egypt’s eastern Mediterranean waters. The larger of the two blocks is located about 5 miles offshore Egypt’s north coast and the smaller block is found in the Nile Delta.
ExxonMobil will operate both areas with 100% working interest and plans to begin seismic acquisition in 2020. The company noted in a press statement that it has been operating for more than 100 years in Egypt through its downstream unit. The new concessions mark the company’s first entry into Egypt’s upstream sector.
Egypt opened its offshore sector to foreign operators when it awarded concessions for the massive Zohr gas field to Italy’s Eni in 2016. Increased production has already reduced the country’s gas imports as it looks to eventually become a net-exporter to markets in Europe and elsewhere. Zohr was on track to produce 3 BCF/D by the end of this year.
Several other operators have signed separate contracts to develop at least 30 new onshore wells in Egypt as the country aims to become a regional oil and gas player.