Egypt on the rebound

Recent announcements of major oil and gas explorations in Egypt are fuelling enthusiasm in the country as investment site once again. For instance, Apache Corporation is spending huge amount to develop Egyptian hydrocarbons over the next two years as part of its exploration efforts in Egypt. The company has reached an agreement with the Egyptian government to invest in exploration and production projects in the country. Oil and gas assets provide relative stability for investors in Egypt because they are not easy to shut down and are mostly far away from urban unrest, according to an analyst from IHS Global Insight in London.

Egypt’s economy continues to feel the impact of the previous year’s revolution that brought down Hosni Mubarak from the presidency. The country needs from $10 billion to $12 billion investments in the next year and half to put it on growth path. That’s because foreign reserves have been depleted from a high of $36 billion prior to the political turmoil to only $10 billion last month. Egypt is expected to receive loans of $3.2 billion from the International Monetary Fund (IMF) next month, whilst an additional $1 billion aid is being negotiated with the World Bank. These loans are expected to spur the economy towards recovery.

From the Apache operations, the Egyptian government is projected to receive $10 million each day in revenue. Apache operates in the US, Canada, the UK, Australia and Argentina, and is currently the biggest concession holder in Egypt’s Western Desert. Egypt is said to have vast potential in terms of exploration and development of oil and gas production. Despite the political unrest in Egypt and the disruption in the natural gas transport due to attacks, Apache continued its operations– and these include the drilling of 11 wells and surveying of more than 2,600 sq.km. of concession area. Before the political upheavals, Egypt produced 600,000 barrels per day (bpd) of oil, most of which is sold in the local market.

Courting investors

Despite significant political and economic problems in Egypt and its declining crude oil production, its oil and gas sector has been attracting foreign investors. Oil and gas is the second fastest growing sector in terms of investments, second to construction and real estate sector.

As the country’s economy pick up its pieces after the political upheaval, there is much optimism and the announcements on further investments into the oil and gas sectors are expected to further trickle to other industries that were affected by the political uncertainties.

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