Petronas deepens investment in the Egyptian gas sector

Malaysian state-owned energy company Petronas has inked an agreement with Egypt to boost natural gas output from the West Delta Deep Marine (WDDM) offshore gas fields in the Mediterranean Sea. The US$222m investment deal, signed by Egypt's Ministry of Petroleum and Mineral Resources alongside Petronas and its partner Shell, involves the drilling of three new wells and the development of marine facilities to bring these wells into production. This initiative aligns with Egypt’s broader strategy to establish itself as a leading regional hub for liquefied natural gas (LNG) trading, capitalising on its vast gas reserves and strategic geographical position.

Petronas has been an active player in Egypt since 2001. It holds a stake in the WDDM offshore gas field, located approximately 110km northeast of Alexandria, in partnership with Shell. The WDDM concession is operated by Burullus Gas, a joint venture that includes Shell, the Egyptian Natural Gas Holding Company, the Egyptian General Petroleum Corporation, and Petronas. Additionally, Petronas owns a stake in the Idku gas processing plant, situated about 50km east of Alexandria. Over the years, Petronas has invested nearly US$10bn in Egypt’s energy sector.

Egypt has faced challenges in maintaining its natural gas production levels. Issues at the giant Zohr field, along with the natural depletion of existing fields, have led to a decline in output. This year, production is expected to increase by 2% to 60.51bn cubic metres (bcm), up from 59.3 bcm in 2023. However, this figure remains below the peak production levels recorded in 2022. To meet its growing domestic energy demands, Egypt has had to import LNG and has suspended exports since March.

Although Petronas has scaled back several of its operations in Africa in recent years, it remains active in the upstream hydrocarbons sector in countries like Angola and Gabon, in addition to its presence in Egypt.

Petronas recently initiated arbitration proceedings against South Sudan, alleging that the government obstructed a US$1.25bn sale of its local assets, which were later taken over by the state. On 7 August, Petronas announced its decision to exit South Sudan after nearly three decades of operations. The company had been in negotiations to sell its assets to UK's Savannah Energy, but the deal fell through. Earlier this year, the primary pipeline used for transporting oil from South Sudan through Sudan for export – established by a consortium that includes China's CNPC, Sinopec, and Petronas – faced interruptions due to the ongoing conflict in Sudan.

 

References

‘Egyptian LNG Project, Idku’, NS Energy, 26 August 2019

Egypt’s Petroleum Minister discusses investment opportunities with Dana Gas, Petronas’, Daily News Egypt, 30 November 2023

‘Oil & gas field profile: West Delta Deep Marine Development Lease Conventional Gas Field, Egypt’, Offshore Technology, 20 May 2024

‘International institution expects Egypt's natural gas production to increase in 2024’, Alarabiya, 03 June 2024

‘Minister of Petroleum and Mineral Resources signs two petroleum agreements with the international oil companies to invest $340 million to increase production at the Mediterranean Sea and Gulf of Suez’, Ministry of Petroleum and Mineral Resources, 28 July 2024

‘Egypt signs investment deals worth $340 million to boost oil and gas production’, Reuters, 28 July 2024

‘Petroleum minister backs Petronas and Shell’s joint efforts in West Delta Gas Field Development’, Egypt Oil & Gas Group, 20 August 2024

‘South Sudan's state-owned Nilepet to take over Petronas oil fields’, S&P Global, 20 August 2024

‘Malaysian energy giant Petronas sues South Sudan over local assets deal’, Reuters, 26 August 2024

‘Petronas and partners export first LNG from Egypt’, Rigzone, Accessed 27 August 2024

‘Petronas integrated report 2021’, Petronas, Accessed 27 August 202