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Wednesday, 14 February 2018

FDI in oil and gas sector has hit USD 10 bn so far this fiscal year; El Molla sounding the right note on payments to IOCs, but what about mid-sized players?

FDI in oil and gas sector up to USD 10 bn this year: Investment by international oil companies reached USD 10 bn so far in FY2017-18, Oil Minister Tarek El Molla said in an interview with Al Borsa. This will likely increase, as the ministry plans to issue exploration tenders, including in the East Mediterranean and in the Nile Delta region sometime in 2H2017-18, said El Molla. The ministry plans to float tenders in the West Mediterranean once seismic mapping of the area is complete and a marketing strategy for the field has been developed. He added that the Red Sea and South Egypt areas will also see tenders for the very first time once geological data has been collected.

El Molla once again reassured IOCs that Egypt is committed to paying its arrears, noting that they now stand at USD 2.3 bn since the last USD 2 bn payment was made in June 2017. He noted that these were lowest levels of IOC-debt since 2013. (The question remains, though: What about small- and mid-sized players, who have seen their receivables balloon at the same time as the global majors are being paid out?)

Pay attention, Israel and Jordan: “Our first priority when Egypt begins exporting is to meet previous export commitments we have made and but were unable to meet over the past few years,” said Tarek El Molla. The statement (toned down and buried as it is) likely carries significant implications for energy politics in our little neighborhood. Israel Electric won a USD 1.76 bn international arbitration award against state petroleum companies EGPC and EGAS and pipeline operator EMG for halting gas supplies to Israel five years ago. The arbitration case remains a primary sticking point preventing exports from Israel’s Leviathan gas field to Egypt. Prime Minister Sherif Ismail has said there will be no open discussion of gas imports from Israel until the arbitration award is cleared. Egypt’s gas contracts Jordan had also been severely disrupted back then on the back of attacks on Egypt’s pipeline.

El Molla also signed contracts with Baker Hughes to set up an online platform to market Egypt’s discoveries, AMAY reports. The database is one of a series of tools announced by El Molla on Monday which aim to spur further oil and gas investments.

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