Can Shale survive in Egypt?

Alongside Apache and Shell Egypt, Cairo will pursue the country’s first shale extraction project, complete with $30 to $40 million in investments in hopes of reviving the country’s ailing oil and gas sector as domestic demand continues to grow.

According to a Reuters report, the agreement includes plans to drill three wells in the Abu al-Ghardeeq region of the Western Desert, marking the first time the North African nation has pursued unconventional energy exploration.

The move comes as Egypt continues to seek out solutions to a challenging energy environment, including waning interest from foreign energy firms and declining production.

According to press reports, Egyptian gas exports saw a 73.4 percent decline July of this year, citing the Information and Decision Support Centre (IDSC). That dramatic reduction meant about $70 million less in energy sector revenue compared to the same period in 2013. Not relegated to natural gas, the decline also hit crude oil exports, reducing it to $350.7 million for the summer month from $398.8 million the year before.

Egypt’s export decline can be traced to a damaging combination of increasing domestic consumption during the hot summer months, which made up 65.2 percent of local natural gas, and lower production levels that have plagued the country since the collapse of the government of Hosni Mubarak in early 2011. Vital foreign participation has been difficult to ensure since 2011 due to political uncertainty and unease about the country’s sizable energy sector debt, amounting to billions owed to the very firms Cairo needs to revive lagging production numbers.