Egypt approves $208mmn oil and gas agreements in Western Desert

Egypt’s cabinet has approved a draft law endorsing a concession agreement for the exploration, development and production of oil and gas in the Badr El-Din Integrated Area in the Western Desert, Al Masry Al Youm reported on December 17, citing a government statement.

The move forms part of the government’s efforts to boost domestic hydrocarbon output and fits within a broader strategy to accelerate exploration and development activity, attract foreign investment and increase recoverable oil and gas reserves over the medium term.

According to the cabinet, the concession agreement is signed between the Egyptian General Petroleum Corporation (EGPC), Cairo-based Cairn Oil & Gas, and Capricorn Egypt, a subsidiary of Capricorn Energy (LSE:CNE).

The concession requires minimum investments of about $208mn and includes plans to drill around 44 wells across the licensed area. Based on government projections, once development is fully under way the project is expected to deliver monthly production of up to 105,000 barrels of oil and about 1.2bn cubic feet of natural gas (about 34mn cubic metres).

The additional output is projected by the government to generate savings of roughly $25mn per month on Egypt’s energy import bill within six to twelve months of the agreement entering into force, easing pressure on foreign-currency reserves. The deal also includes provisions for training grants aimed at supporting skills development in the local energy sector.

The concession still requires ratification by Egypt’s parliament before entering into force, a standard step for upstream agreements. No timeline for parliamentary approval or details on concession duration and fiscal terms have yet been disclosed.

Egypt’s Western Desert remains one of the country’s most important hydrocarbon regions, accounting for a substantial share of national oil and gas production. Continued investment in the area is viewed by the government as critical to offset natural declines in mature fields and sustain output levels amid rising domestic energy demand.