Minister of Petroleum and Mineral Resources Tarek Al-Molla signed agreements with Canadian company Transglobe and Pharos Energy this week to prospect for and produce petroleum in several areas of Egypt’s Eastern and Western Deserts.

The agreements include total new investments that amount to $506 million and a grant of $67 million to drill 12 wells, according to a statement from the Ministry of Petroleum.

The agreement with the Canadian Transglobe Corporation includes the regions of North West Ghareb, West Ghareb, and West Bakr in the Eastern Desert, as well as new investments for research and development and the production of crude oil.

The agreement with Pharos Energy aims to inject investment for research and development and the production of crude oil in the Fayoum region of the Western Desert.

According to the ministry statement, the agreements aim to increase crude oil production in a number of concession areas and to use the latest technologies in the fields of research, drilling, and production in a way that contributes to increasing petroleum production in those areas.

The signings follow other agreements recently signed with petroleum companies operating in Egypt as part of the ministry’s “continuous efforts to motivate companies to pump more investments and intensify activities to maximise production rates, especially with the current rise in international oil prices.”

Oil prices this week were higher than $87 per barrel of Brent crude, their highest level in nearly seven years. They have increased since the beginning of the year by about $8, amid expectations that oil may go above $100 a barrel later this year.

“The rise in prices is due to fears of the spread of the Omicron variant of the coronavirus and the subsequent measures taken by many countries,” said Gamal Al-Qalioubi, a professor of petroleum engineering and energy, adding that the decline in the volume of the oil production of countries that are members of the OPEC cartel to 27.5 million barrels has also helped to increase oil prices.

The Covid-19 pandemic has led to a depression in the oil market due to a lack of supply coupled with an increase in demand, while witnessing a decline in contracts for long and medium-term futures contracts, Al-Qalioubi said in an interview with the DMC TV channel.

He said the US had resorted to releasing part of its strategic oil reserves in a bid to control the rising prices. The highest recorded price of oil was in 2008, when the price of a barrel reached $136.

According to the Central Agency for Public Mobilisation and Statistics (CAPMAS), the crude oil sector topped the sectors that contributed the most to total investment in Egypt during the fourth quarter of the 2020-2021 fiscal year, recording 14.3 per cent compared to 4.5 per cent in the same period of the previous year.

The figure was backed by an agreement between Egypt’s Petroleum Ministry and the US company Apache in December 2021, whereby the latter would spend a minimum of $3.5 billion on research, exploration, development, and production in concession areas in the Western Desert, as well as use the latest technologies in the fields of research, drilling, and production.

The Egyptian General Petroleum Corporation also signed a $1 billion agreement with the Italian energy company Eni in December for oil exploration in the Gulf of Suez and Nile Delta region. Eni is committed to spend at least an additional $20 million to drill four new wells, according to a statement by the Ministry of Petroleum.

On 3 January, Egypt awarded eight oil-exploration blocks to the Eni, British Petroleum, Apex International, United Energy, Enap Sipetrol, Energy Egypt, and Ina oil companies.

According to the Petroleum Ministry, the companies will invest a minimum of $250 million and drill 33 wells in blocks within the Mediterranean, Western Desert, and Gulf of Suez regions. The announcement was followed by Egypt’s first global oil and gas exploration auction held by the state-owned Egyptian Natural Gas Holding Company for 24 blocks through a new digital portal aiming to lure gas and oil-exploration companies to the country.

Egypt has made a series of oil and gas discoveries in recent years, with the giant Zohr Gas Field off the Mediterranean coast being the most notable discovery with an estimated reservoir of around 30 trillion cubic feet of gas.

Egypt’s petroleum products in 2021 reached 82.4 million tons, securing sufficient fuel supplies for the local market whose consumption amounted to about 75.8 million tons of petroleum and natural gas.

*A version of this article appears in print in the 27 January, 2022 edition of Al-Ahram Weekly.