Egypt announces record-high crude oil production for first time in decades

Sep 24, 2020

Egypt’s Minister of Petroleum and Mineral Resources Tarek el-Molla recently announced that Egypt has reached a record in the production of crude oil, exceeding 65,000 barrels per day, for the first time since 1957.

During a Sept. 13 meeting of the General Petroleum Company’s General Assembly, which he presided over, Molla stressed the importance of increasing research work and activities, exploration, development of existing fields and setting new production wells to increase production, in addition to developing the main infrastructure needed for ongoing production operations and enhanced exploitation.

Egypt is considered one of the first countries in the world to achieve a precedent in all stages of petroleum production, as it started in 1886 drilling the first well in the Jamsa area on the west coast of the Red Sea. Field production began in 1910, and petroleum discoveries in Egypt followed. In 1961, the first sea petroleum field in Egypt and the Middle East — Belayim marine oil field — was discovered.

The Western Desert region represents the largest part of crude oil production in Egypt with 56%, followed by the Gulf of Suez with 23%, the Eastern Desert with 12% and the Sinai Peninsula with 9%, through 43 companies, the most important of which are Khaleda Petroleum Company, Belayim Petroleum Company (Petrobel), GAPCO Company, General Petroleum Company, Agiba Petroleum Company and Badr al-Din Petroleum Company. The major foreign companies operating in production activities in Egypt are the American Apache Corporation, the Italian Eni, the Emirati Dragon Oil and the Dutch Shell.

Nabil Abdel-Sadiq, president of the General Petroleum Company, revealed, during the same meeting, that seven new petroleum discoveries were achieved, and that the total trial rates reached around 6,700 barrels of crude oil per day and 21.4 million cubic feet of gas per day. He said that the new discoveries and technical studies that were carried out and the reassessment contributed to adding proven oil reserves during the year by about 33.8 million barrels of oil equivalent.

Over the past six years, Egypt has achieved 295 new petroleum discoveries, 197 crude oil discoveries and 98 gas discoveries in the areas of the western and eastern deserts, the Mediterranean, Sinai, Delta and the Gulf of Suez. These discoveries have added to the petroleum reserves about 371.619 million barrels of oil and condensates, and about 38 trillion cubic feet of natural gas. The total production of petroleum wealth amounted to about 440 million tons, 189.6 million tons of crude oil and condensates, about 234 million tons of natural gas and 7.8 million tons of butane gas other than butane produced by refineries and investment companies.

In this context, Abdel Sadiq noted, “The production rate from the company’s fields reached about 61,000 barrels of oil equivalent per day during the year, and by adding the company’s share of production of the participating companies, the total production exceeds 95,000 barrels of oil equivalent per day. Several measures were taken and had a direct impact on increasing the productivity of some docks and land wells, mainly Al-Hamad Wharf that saw a productivity increase from 4,400 to 9,900 barrels per day, using the latest technologies in the field of electrical recordings in marine wells for the first time in Egypt.”

Talaat al-Suwaidi, a member of parliament and head of the parliamentary Energy and Environment Committee, said the ministry’s announcement that Egypt has reached a record in crude oil production shows that President Abdel Fattah al-Sisi attributes great importance to supporting this promising sector. 

Suwaidi told Al-Monitor over the phone that Egypt has become one of the most important countries in the Middle East and Africa region, which attracts global investment. He underlined that Egypt’s production has enabled it to achieve self-sufficiency in gas and resort to exporting.

Atef Hassan, head of Petrobel, told Al-Monitor that Egypt is currently producing about 1.1 billion cubic feet of gas per day and about 70,000 barrels per day of crude oil, after its success in implementing plans to develop production fields in the Gulf of Suez, in addition to 12,000 barrels of condensate per day and about 280 tons of butane gas per day.

He pointed out that Petrobel made investments in the fields of exploration, development and operation of gas and crude oil fields, amounting to $720 million during the ending fiscal year. It also succeeded in rationalizing expenditures by more than $50 million, amid highly efficient production processes and plans.

On Sept.16, Eni and its partner BP announced the discovery of new gas in the Greater Noros area, in the Abu Madi West lease agreement, off the coast of Egypt.  

Hassan noted that Egypt announced in August the starting operation of al-Hamra petroleum port in New Alamein, which comprises 12 petroleum agreements with international companies, including eight with the Egyptian Natural Gas Holding Company, for research, exploration and drilling in the Western Desert, the Red Sea and the Mediterranean Sea. He added that the total investment in research and exploration for these agreements exceeds $1 billion.

Egypt owns eight crude oil refineries with a production capacity of around 38 million tons — only 25 million tons of which are exploited yearly.

According to figures issued by the Central Agency for Public Mobilization and Statistics at the end of August, and cited by the Egyptian Al-Bawaba news website, crude oil imports increased by 34.7% to a record $217.6 million compared to $161.5 million. Forecasts indicate that Egypt’s oil imports will drop by at least 17% due to a decline in imports of crude oil and petroleum derivatives by 17.1% during fiscal year 2021, to reach 18.4 million tons, compared to 22.2 million tons during fiscal 2020.

Egypt has been seeking for years to transform into a regional hub for trade in gas and petroleum, as part of its National Energy Efficiency Action Plan.