Egypt’s Economic Troubles Could Harm Its Booming Energy Industry

Optimism about Egypt’s future as an energy hub is still going strong, as offshore East Med natural gas reserves are plentiful, and new discoveries are still being made. The growing cooperation between Egypt, Israel, Cyprus, and Greece, to monetize and integrate available reserves simultaneously has received a major boost from the fallout of the Russian invasion of Ukraine, and the still-existing concerns about energy security in Europe.

Egypt’s LNG exports are suddenly in high demand and are expected to grow while demand in Europe continues to grow. Overall, when only looking at these exogenous factors, Egypt’s future is bright. However, North Africa’s largest economy is hitting rock bottom, and as inflation continues to rise, internal unrest is still a major threat. 

In terms of new gas production, Egypt is making progress. British energy company Energean reported this week that the first gas had been delivered at its offshore Egyptian North El Amriya and North Idku (NEA/NI).  The two projects were sanctioned in January 2021, and first gas was expected to flow within 26 months. Currently, first gas has been produced on the NEA6 well, while three more wells will be online during 2023. The NEA/NI development, which lies in Egypt’s shallow waters, holds an estimated 39 mmboe of 2P reserves (88% gas) with net working interest production expected to peak at 15 - 20 kboed (88% gas) in 2024. Production will use existing infrastructure and involves the subsea tieback of four wells to Energean's North Abu Qir PIII platform.