Egypt’s parliament has authorized the Ministry of Petroleum and Mineral Resources to finalize two contracts that expand the interests of Russia’s second-largest oil producer Lukoil in exploration and production in the Western Desert.
The agreements approved on 30 April with Lukoil Overseas Egypt Ltd. strengthen Cairo’s strategic alliance with Moscow in energy markets, while growing Lukoil’s footprint in Africa. The company is also active in Cameroon, Nigeria, Ghana, and Congo, according to its website.
The first of the newly approved contracts grants Lukoil Overseas Egypt Ltd. exploration and production rights in partnership with the South Valley Egyptian Petroleum Holding Co. in the South Wadi El-Sahl region of the Eastern Desert, Russia’s Interfax news agency reported.
A second agreement enables Lukoil Egypt Ltd. to engage with the Egyptian General Petroleum Corp. in the adjacent Wadi El-Sahl area.
Both concessions are near oil fields where Lukoil is already active, including West Esh El Mallaha in the Eastern Desert near Hurghada and its extension to the northeast. Lukoil holds a 50% operator interest alongside Egypt’s Tharwa Petroleum in both.
Lukoil’s Egyptian Journey
Lukoil entered Egypt in 1995 and has built a portfolio that started with what is today a 24% stake in the Eni-operated (76%) Meleiha oil block.
The analytics company Wood MacKenzie notes that the Meleiha block in Egypt’s Western Desert is Eni’s largest asset in the area, encompassing more than 45 oil and gas fields.
In 2021, Eni signed an agreement with the Egyptian government, the Egyptian General Petroleum Corp., and Lukoil to merge the Meleiha and Meleiha Deep concessions in the Western Desert for exploration and development through 2036, with an extension possible to 2041. During that time, the partners agreed to acquire high-resolution 3D seismic, launch exploration and development drilling campaigns, and construct a gas treatment plant.
Eni was Egypt’s second-largest gas producer in 2024, after BP, while Russia’s national oil company Rosneft ranked third, according to GlobalData, a data analytics and consulting company.
In Egypt, Russia’s Rosneft holds 30% in the Eni-operated (30%) Zohr gas field development. It also holds 30% in the offshore Shorouk Concession, which contains the Zohr field alongside Eni (50%), BP (10%) and the UAE’s Mubadala Energy (10%).
Russia’s TASS news agency reported that Lukoil’s oil and condensate production—excluding the West Qurna 2 project—fell 2.6% year-on-year in 2024, while gas production declined by 2.3% over the same period.
Egypt and Rosatom
While Egypt’s focus on reversing its declining gas production is grabbing headlines as the country deals with electricity blackouts, nuclear energy is being added into the mix—with Russia’s help.
In January, Egypt’s State Information Service reported that the parliament approved a $25 billion Russian state export loan covering 85% of the costs of constructing Egypt’s first nuclear power plant near the Mediterranean coastal town of at El Dabaa, approximately 140 km west of Alexandria. Egypt is committed to raising the remaining 15% ($5 billion) for construction costs, import of specialized equipment, and technical and managerial expertise.
Russia’s state nuclear company Rosatom is already building the plant which will supply over 10% of Egypt’s electricity by 2030, according to a 2023 analysis in The Bulletin of Atomic Scientists that focused on how the plant's four Russian-designed 1.2-GW VVER reactors would integrate into Egypt's power mix.
VVER is an acronym for a Russian reactor design which translates into “water-water energetic reactor.” It is a Russian-designed pressurized water reactor that uses light water as both coolant and neutron moderator.