New ADNOC-bp gas venture reignites Egypt’s energy ambition

Written by
26 Feb 2024
New ADNOC-bp gas venture reignites Egypt’s energy ambition

Abu Dhabi National Oil Company (ADNOC) and UK’s bp have announced plans to launch a joint venture (JV) in Egypt with a deal that will see bp transfer existing concession interests with ADNOC committing funding for future growth opportunities.

The new JV also includes bp exploration agreements in Egypt, with the overall goal of cultivating a ‘highly competitive’ gas portfolio. ADNOC will hold a 49 per cent stake in the venture with bp majority shareholder at 51 per cent. The JV is expected to complete in the H2 2024, contingent upon regulatory approvals.

JV assets will include the Shorouk concession, containing the super-giant Zohr gas field, where bp holds 10 per cent interest (Mubadala Investment Company holds a further 10 per cent); the 100 per cent fully owned North Damietta concession, containing the deepwater Atoll field; and North El Burg block, home to the undeveloped Satis field, where bp holds 50 per cent interest.

Exploration concession agreements to be transferred to the portfolio include North El Tabya, Bellatrix-Seti East and North El Fayrouz.

Commenting on the JV, Musabbeh Al Kaabi, Executive Director for Low Carbon Solutions and International Growth, ADNOC, said: “Today’s announcement represents a significant step forward as ADNOC builds its international natural gas portfolio. 

“Building on our long-standing strategic partnership with bp, ADNOC looks forward to continue exploring other opportunities as we collectively seek to decarbonise our operations and lead a just and equitable energy transition.”

Egypt’s ambition to become a regional energy supplier has faced mounting challenges in recent months due to the ongoing Israel-Gaza conflict . The (temporary) late 2024 cessation of gas flow from Israel and current Red Sea trade crisis have further highlighted the vulnerability of the country’s energy security.

The latest S&P Global Commodity Insights data reports that Egyptian LNG exports stood at 70,000 megatonnes (Mt) as at 9th February 2024, representing 35 per cent of levels recorded the month previously. Year to date, the country has exported 270,000 Mt of LNG, which represents a decline of 64 per cent against the same period last year.

It is also facing rising domestic demand with forecasted population growth of  total 10.41 per cent – 11 million people – between 2023 and 2028.

Government impetus to catalyse diversification of the energy mix saw Egypt sign 29 oil and gas exploration agreements in 2023, with a total value of US$1.2 billion. According to the Ministry of Petroleum and Mineral Resources, US$61 million was allocated for drilling 87 new wells.

In a meeting with Egypt’s President Abdel Fattah El Sisi, held on the sidelines of this week’s Egypt Energy Show (EGYPEES 2024) taking place in Cairo, bp CEO Murray Auchincloss confirmed company plans to inject up to US$1.5 billion in exploration activities in the country in the coming years. This has the potential to power further investments valued at close to US$5 billion.
 

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