Written by:khaled tamer

Counter Declining Output

Cairo – September 12, 2025 – Egypt has taken bold steps in recent days to launch a new phase of expansion in the oil and gas sector, signing major agreements with international companies and unveiling a series of developmental and exploratory projects. These efforts aim to boost domestic production, address economic challenges, and reduce dependence on costly imports at a time of rising energy demand. The government’s strategy comes at a critical juncture as Egypt faces unprecedented pressure in its energy sector, following a sharp decline in natural gas output in recent years alongside increasing domestic consumption.

Falling Production and Rising Domestic Pressures

Over the past four years, Egypt’s natural gas production has dropped by nearly 40%, reaching 3.5 billion cubic feet per day in May 2025, down from 6 billion cubic feet per day in 2021. This steep decline has raised concerns within both government and private sectors, especially as electricity demand, industrial usage, and household consumption continue to rise. With growing domestic needs, the government has had no choice but to accelerate new exploration and development projects to bridge the supply-demand gap and avoid costly imports in foreign currency.

EGAS Awards New Exploration Licenses and Adds Reserves

The Egyptian Natural Gas Holding Company (EGAS) announced in its 2024/2025 annual report that it had awarded nine new exploration blocks to local and international firms, with planned investments totaling $479 million. The initiative underscores Egypt’s commitment to encouraging leading global companies to step up exploration efforts in promising areas such as the Mediterranean, Western Desert, and Gulf of Suez. EGAS also reported 29 new natural gas discoveries and three additional successful wells, which added an estimated 1.85 trillion cubic feet of confirmed reserves. In parallel, seven new development projects and 23 producing wells were successfully brought online, representing combined investments of approximately $1.7 billion.

Landmark Agreement with BP for Five Offshore Wells

One of the most significant agreements signed this week was a memorandum of understanding between EGAS and BP to drill five new offshore wells in the Mediterranean Sea. The wells, which will be drilled at depths ranging from 300 to 1,500 meters, mark a major strategic step toward reviving offshore exploration, with operations expected to begin in 2026. The wells will be tied into the existing West Nile Delta production network, potentially boosting output significantly over the coming years. Industry experts note that the deal demonstrates international confidence in Egypt’s energy sector and reflects the government’s commitment to maintaining an attractive investment climate.

Expanding Infrastructure and Household Gas Connections

Beyond exploration and production, the Egyptian government has continued to push for broader adoption of natural gas in everyday life. In the last fiscal year, natural gas connections were extended to more than 572,000 new residential units, raising the total number of households connected to the grid to 15.5 million units since the launch of the national program. Meanwhile, 34 new compressed natural gas (CNG) fueling stations and 17 car conversion centers were opened, supporting the state’s initiative to reduce reliance on gasoline and diesel, while promoting gas as a cleaner and more cost-effective fuel alternative.

Rising Investments and International Partnerships

Recent announcements revealed over $2.2 billion in new gas sector investments, covering exploration agreements and development projects. In addition to BP, Egypt signed deals with global energy leaders such as Shell, Eni, and Arcius Energy to explore new Mediterranean and Nile Delta acreage. These investments not only bring financial inflows and advanced technology but also generate thousands of jobs and strengthen Egypt’s technical expertise in oil and gas operations.

National Goal: 6.6 Bcf/d by 2027

The government has set an ambitious target of raising natural gas output to 6.6 billion cubic feet per day by 2027. Achieving this goal will require strict adherence to drilling schedules, accelerated development of new discoveries, and upgrades to the country’s infrastructure, including processing facilities, pipelines, and storage terminals.

Key Challenges Facing the Sector

Despite the progress, several challenges continue to weigh on the industry. These include:

• Technical and financial hurdles: Deepwater drilling requires cutting-edge technology and significant capital.
• Declining mature fields: Many onshore and offshore fields are nearing depletion, increasing maintenance costs.
• Environmental concerns: Pressure to cut carbon emissions and manage associated gases responsibly.
• Infrastructure needs: The necessity of modernizing pipelines, processing plants, and distribution systems to handle expected production growth.

Economic and Social Impact

Economically, these initiatives are expected to reduce Egypt’s import bill for gas and petroleum products, easing pressure on foreign reserves. Socially, expanding gas access to households and vehicles improves citizens’ quality of life by lowering energy costs. From an investment perspective, drawing in multinational companies solidifies Egypt’s position as a key destination for energy investment in the Middle East and North Africa.

Egypt’s Regional Role as an Energy Hub

Egypt is working toward establishing itself as a regional energy hub, leveraging its strategic location and advanced infrastructure, which includes liquefaction plants, extensive pipelines, and access to both the Mediterranean and Red Seas. This positioning could make Egypt a vital supplier of gas to European markets, particularly as the continent seeks to diversify away from Russian supplies.

Conclusion: A Promising Future Amid Challenges

With these major agreements and accelerated development plans, Egypt is clearly regaining momentum in the oil and gas sector. While challenges remain, current trajectories suggest the country is on track for a significant production rebound by 2027, potentially restoring its role as a leading regional gas producer. Success would not only secure domestic energy supplies but also unlock new export opportunities, strengthen the national economy, and provide long-term stability for Egypt’s energy sector.