Egypt will invite international oil companies to explore for petroleum wealth in the Red Sea before the end of the year, officials said.
The announcement from Egypt’s Petroleum Ministry comes after news that an international alliance has nearly completed collecting geological and geophysical data in a 10,000 sq.km area of the Red Sea off the Egyptian coast.
“The work of the alliance is more than 95% complete,” said Hamdi Abdel Aziz, Petroleum Ministry spokesman. “It will soon turn the data it has collected into a comprehensive geophysical study about the area.”
An international alliance that includes British geophysical services company WesternGeco-Schlumberger and the Norwegian geoscience data company TGS-NOPEC has been collecting data on Egypt’s Red Sea coast since December to determine oil and gas concentrations.
The alliance is investing $750 million in the studies, using equipment to create images of the seabed dozens of kilometres underwater.
The alliance, the Egyptian Petroleum Ministry said, expected to finalise its data collection process by the end of March and is to publish a study outlining hydrocarbon concentrations in the area by September. The Petroleum Ministry would then issue a global tender to explore for hydrocarbons in the region.
Egypt has undertaken significant diplomatic efforts, including a maritime boundary demarcation deal with Saudi Arabia in April 2016, to allow for greater petroleum exploration.
Opponents challenged the agreement in court because two Red Sea islands — Tiran and Sanafir — would transfer from Egyptian control to Saudi administration but Egypt’s Constitutional Court ruled that the agreement was a sovereign affair for the government and that the courts had nothing to do with it.
Analysts said Cairo’s eagerness to conclude the boundary demarcation with Saudi Arabia, despite public opposition, was to advance petroleum exploration in the Red Sea.
Geological studies by Saudi state-owned Aramco ten years ago indicated significant oil wealth in the Red Sea. There are expectations in Cairo that the new exploration will reveal even more promising results.
“This is an area that has been unexplored for a very long time but all studies refer to the presence of huge amounts of oil and gas there,” said oil and gas expert Ramadan Abul-Ela.
“The international alliance collecting the geophysical data in the area now would never have decided to spend hundreds of millions of dollars on this if it had not been sure that there is a hidden treasure in the uncharted waters of Egypt’s Red Sea coast.”
International oil and gas companies, Abdel Aziz said, have been asked for copies of the study.
Cairo is pinning its hopes on major potential oil and gas finds to increase its confirmed oil and gas reserves and bolster a plan to transform Egypt into an international energy hub.
Boasting extensive oil refineries and gas liquefaction plants as well as several petrochemical plants, Egypt has initiated moves to become an energy hub by signing contracts with Saudi Arabia and Iraq to refine and re-export oil to international markets.
Huge natural gas discoveries in the eastern Mediterranean have buoyed Cairo’s energy plans. Egypt announced it would double production at the offshore Zohr gas field to 700 million cubic feet per day.
With new natural gas discoveries in the Red Sea and the eastern Mediterranean, Egypt aims to achieve natural gas self-sufficiency before the end of 2018 by ramping up production to 6 billion cubic feet per day, Petroleum Minister Tarek al-Molla predicted last year.
Energy expert Ibrahim Zahran said he expected international interest in the Red Sea to be “huge.”
“Everybody believes that there is an untapped oil and gas wealth in this area,” Zahran said. “This is why I expected everybody to be interested.”