Egypt 2022 International Bid Round for oil and gas exploration

On December 27 2022, the Egyptian Minister of Petroleum and Mineral Resources, Tarek El Molla, announced the launch of a new international bid round to search for natural gas and crude oil in 12 regions in the Mediterranean and Nile Delta, including 6 offshore and 6 onshore regions, through the Egyptian Upstream Gateway (EUG). The closing date for submissions is 30 April 2023.

As stated by El Molla, “the bid put forward by the Egyptian Natural Gas Holding Company (EGAS), Egypt’s gas regulator, for the year 2022 comes as an extension of the ministry’s work strategy which started in 2016 to attract more investments for oil and gas exploration in promising areas, especially the Mediterranean”. El Molla also pointed out that “the strategy provides opportunities to attract new international companies to work in Egypt, in addition to encouraging operating companies to increase their investments and expand their work areas”.

Furthermore, the Minister highlighted that these measures contribute to the Egyptian state’s efforts to intensify research and exploration activities for natural gas resources in the Mediterranean, in light of the efforts of Mediterranean countries to make new gas discoveries and increase production.

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The bid is the third to be launched using the latest digital features of the EUG, which was launched by the ministry in early 2021 within the framework of adopting a new approach aimed at developing all its activities in the field of attracting investments for research and exploration projects. El Molla underlined that “the portal provides digital and rapid access to basic information on the proposed bid and its regions, technical data for each region, seismic survey and well data, in addition to the basic terms and conditions, the agreement form, and the procedures for participation in the bid”.

The bid round follows the award of Northwest Abu Qir Offshore Area (BP 82.75% and Wintershall Dea 17.25%), and the Bellatrix-Seti East Block (Eni 50% and BP 50%) in November 2022. In addition, the King Mariout Offshore Area (BP 100%), North El Fayrouz Offshore Area (Eni 50% and BP 50%) and the North El Tabya Area Extension (BP 100%) licenses were also awarded in 2022.

Chevron and the Nargis-1 well

On January 15 2023, Chevron confirmed a major gas find in the Nargis-1 well, with partner Eni and state-owned EGAS, stating it will be exploited via existing infrastructure. Nargis-1 was drilled in 309 metres of water in the Nargis Offshore Area Concession by the drillship Stena Forth, which is still on location having arrived at the Nargis block in late September 2022, according to ship tracking data.

According to Egypt’s Petroleum Ministry, Chevron hit gas with its Nargis-1 exploration well in the eastern Nile Delta play following a news report that the company had found 3.5 trillion cubic feet of gas; Chevron’s probe hit 61 metres of Miocene and Oligocene gas-bearing sandstones which it described as “high-quality reservoirs”. As stated by EGAS, the well was drilled to a total depth of more than 5000 metres, with the reservoirs being intercepted in a 140-metre gross pay zone.

As stated by Clay Neff, President of Chevron International E&P, “the find follows the company’s entry into the Egyptian upstream sector in 2020”. Neff also noted that Chevron would now work with Egypt’s government, EGAS and its partners, which include Eni and Cairo-based Tharwa Petroleum, “to support the growth of Egypt’s energy sector through this exploration programme”. Both Chevron and Eni have 45% stakes in Nargis, with Tharwa on 10%.

In addition to the aforementioned, Eni, Chevron’s key partner in the new field, stated that Nargis “can be developed leveraging the proximity of Eni’s existing facilities”. This being said, EGAS announced that it aims to work with Chevron and its partners to expedite production from Nargis as soon as possible using a rapid development plan based on current facilities.

Besides the Nargis-1 well in Egypt, Chevron also operates the huge Leviathan and Tamar fields in Israel and the Aphrodite project offshore Cyprus. According to Neff, the Mediterranean has abundant energy resources, and their development is driving strategic collaboration in the region”.

On the other hand, Eni has announced that “Nargis-1 confirms the validity of its focus on Egypt offshore, which the company will further develop thanks to the recent award of exploration blocks North Rafah, North El Fayrouz, North East El Arish, Tiba and Bellatrix-Seti East”. Moreover, Eni is currently drilling ahead on a huge carbonate gas prospect in NE El Arish.

Egyptian Natural Gas Holding Company (EGAS) and Eni sign MoI

As stated in an official Ministry statement, in January 2023, Minister El Molla and Eni’s CEO, Claudio Descalzi, witnessed the signing of a Memorandum of Intent (MoI) by Magdy Galal, President of EGAS, and Guido Brusco, Head of Natural Resources Operations at Eni, for the technological integration of flare gas reduction, and evaluation efforts and other emission reduction technologies between the EGAS and Eni.

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As stated in the MoI, the 2 companies will study and identify available opportunities for reducing greenhouse gas emissions in oil and gas sector projects in Egypt and prepare a master plan for the economic utilization of the gases resulting from these operations.

In other words, EGAS and Eni will take important steps to reduce the burning of flare gases and emissions to the lowest technical level, evaluate and implement several initiatives to reduce greenhouse gases, including the construction of photovoltaic electricity units, and evaluate carbon capture, storage and use initiatives.

Following up on efforts and initiatives announced at the COP 27 Conference, which was hosted in Egypt between November 6-18 2022, this MoI comes within the framework of Egypt’s commitment to global initiatives aimed at preserving the environment, reducing emissions and confronting the effects of climate change.

In addition, it builds on the memorandum of understanding (MoU) that was signed in July 2021 between EGAS, the Electricity Holding Company (EHC) and Eni, with the aim of cooperation in identifying and evaluating joint opportunities to support carbon removal by identifying job opportunities in the field of energy transition. This includes collecting, capturing, storing and using carbon, as Eni possesses advanced expertise and technologies in the field of reducing emissions and capturing and storing carbon and benefiting from it.

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