History of Egyptian oil and gas industry

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1886 - 1948: early exploration and production

Egyptian petroleum history began in 1886, when Belgian specialist M. de Bay, recruited by the Khedive Tewfik Pasha government, struck oil in Ras Gemsah in the Eastern Desert. But it wasn't until 1911 that Ras Gemsah became a commercially viable source of oil and Egypt's first refinery was established. In the same year another important discovery was made in the Hurghada field by Anglo Egyptian Oilfields Ltd, a joint venture between Shell and BP. Exploration activities shortly stopped during the first world war, but production at the Hurghada field grew steadily to about 5,000 barrels per day (bpd) by 1931.[1]

In the years following the war, the Egyptian oil industry continued to grow alongside new discoveries. Companies like the Anglo Iranian Oil, Royal Dutch Shell, Standard Oil of California and Standard Oil of New Jersey continued to explore, authorised by the Egyptian government, discover new fields.[2] In 1935 natural gas production commenced and reached 1.5 billion cubic feet (bcf) per year between 1941-1953.[3]

1948 - 1990: nationalisation, crisis and expansion

In 1948, the Egyptian government approved of a law that forbade the export of crude oil and aimed to stimulate the national refining and petrochemical sectors. After the coup d'état in 1952, which started a wave of nationalisation and which was followed by the establishment of the national oil company, the General Petroleum Authority (GPA), in 1956, President Gamal Abdel Nasser strove to strengthen the Egyptian extractive industries.[4]

Also in 1956, Nasser's objective of a strong state led him to nationalise the Suez Canal, then already a vital transit route for oil. Israel, with British and French backing, attacked Egypt in an attempt to regain Western control of the canal and remove Nasser from power. Ultimately the Suez Crisis, considered one of the watershed moments of the then ongoing decolonisation, could only be stopped through intervention by the United States and Soviet Union.[5]

Meanwhile, new oil discoveries in Ras Bakr, Khreim and Ras Gharib helped the Egyptian oil industry continue to grow, and the first offshore oilfield was drilled in North Balayim in 1961. The GPA was renamed the Egyptian General Petroleum Corporation (EGPC) in 1962 and, operating through joint ventures with foreign companies, the EGPC created the Gulf of Suez Petroleum Company (Gupco) together Standard Oil, which was Egypt's largest oil producer for years.[6] In 1972, Egypt joined the Organisation of Arab Petroleum Exporting Countries; the Ministry of Petroleum was formed the following year.[7]

In 1979, Egypt opened the Sinai Peninsula for exploration after regaining possession from Israel, as the country reached oil production of 500,000 barrels per day (bpd). Even as the Sinai grew in importance as an oil region, most exploration centered on the Western Desert during the 1980s, with new finds by Shell and other companies.[8]

1990 - present: from oil to gas

Oil production in Egypt peaked at 922,000 bpd in 1996. Since then the country's major oilfields have matured considerably and crude output has fallen to about 600,000 bpd.[9] Meanwhile, after several natural gas finds in the Western Desert and in the Nile Delta, Egypt has become an important natural gas producer which has helped attract a number of private investors.[10]

Since the late 1980s, Egypt's extractive industries have witnessed a wave of privatisation, with approximately 40 percent of all state-owned enterprises privatised since 1994. However, privatisation is restrained due to the large debt of the state-entities and severe over-staffing, with the Egyptian General Petroleum Corporation and the Egyptian Natural Gas Holding Company being off limits.[11]

References

  1. "More than A 100-year journey", Egypt Oil&Gas, retrieved 8 March 2013.
  2. "Egypt E&P Summary", drillinginfo, retrieved 8 March 2013.
  3. "Egypt Revisited", The Association for the Study of Peak Oil and Gas, February 2009.
  4. "More than A 100-year journey", Egypt Oil&Gas, retrieved 8 March 2013.
  5. "An affair to remember", The Economist, 27 July 2006.
  6. "Egypt E&P Summary", drillinginfo, retrieved 8 March 2013.
  7. "More than A 100-year journey", Egypt Oil&Gas, retrieved 8 March 2013.
  8. "Egypt E&P Summary", drillinginfo, retrieved 8 March 2013.
  9. "Egypt Revisited", The Association for the Study of Peak Oil and Gas, February 2009.
  10. "Egypt Steps on the Gas", business today, 14 February 2012.
  11. "Oil and Gas in Egypt", MBendi, retrieved 11 March 2013.