New and “friendlier” Mineral Resources Act to be introduced to Egypt’s House of Representatives in three months
** #4 LEGISLATION WATCH- New and “friendlier” Mineral Resources Act to be introduced to the House in three months: The Madbouly cabinet will present amendments to the Mineral Resources Act to the House of Representatives within three months to make the industry more attractive to investors, Oil Minister Tarek El Molla said on Thursday. “We have engaged with everybody so that I think in the coming two or three months maximum we will be able to have a fresh, new-look, appealing law,” El Molla noted, according to Reuters.
Is the mining industry finally getting its wish? The mining industry believes that the reforms will see Egypt scrap the current oil-and-gas-style production sharing agreement and move to a tax, rent and royalty model — and eliminate the requirement of a 50:50 JV with EMRA. The move has long been called for by industry players (cf: Aton Resources’ Mark Campbell in an exclusive piece for Enterprise last year: Egypt’s golden opportunity: Mining for the 21st Century). The bill is also expected to allow exploration companies to acquire exploration ground without first obtaining exploration licenses.
Business-friendly policies for energy as well: The move comes as the Oil Ministry is reportedly planning to roll out new production sharing contracts with friendlier terms for international oil companies in the first quarter of 2019, after it concludes its next tender for Red Sea exploration blocks at the end of this year. The new framework would see companies “bear the cost of exploration and production in return for a share of the output,” which will vary from one concession to the other, based on the cost of investment, ministry sources told Bloomberg earlier this month.
The private sector is taking notice: Egypt’s new oil and gas sector policies received praise from Apache Egypt General Manager David Chi on Thursday during a visit of US corporations organized by our friends at AmCham, according to Al Shorouk. He credited the private sector-friendly policies with making it attractive to foreign investors, saying that “now was the time to invest in Egypt’s oil and gas sector.” BP CEO Bob Dudley told Reuters on Thursday that BP was also looking to grow in Egypt where it is developing the West Nile Delta project. BP had pledged USD 2 bn in new investments in 2019.
That said, BP will not raise its stake in Zohr for “capital employment reasons,” Dudley said. The option for BP to acquire a larger stake in Zohr has expired. BP already owns a 10% stake in Zohr. BP and Eni are planning to begin joint exploration in Libya in 1Q2019, Dudley said.