The petroleum industry plays a key role in the Egyptian economy. It is one of four main sources of foreign exchange with Egypt being currently an oil exporter. Egyptian oil production comes from four main areas: the Gulf of Suez, the Western Desert, the Eastern Desert, and the Sinai Peninsula. In addition to its role as an oil exporter, Egypt has strategic importance because of its operation of the Suez Canal and Sumed (Suez-Mediterranean) Pipeline. These are two routes for export of Persian Gulf oil. The Sumed pipeline is an alternative to the Suez Canal for transporting oil from the Persian Gulf region to the Mediterranean. The 200-mile pipeline runs from Ain Sukhna on the Gulf of Suez to Sidi Kerir on the Mediterranean.

The first oilfield in Egypt was discovered in 1869 and it came into production in 1910. At this time, Anglo-Egyptian Oilfields (a joint venture between BP and Shell) was the major operator in the area and continued exploration and development until it was nationalized in 1964. In 1962, the Egyptian General Petroleum Corporation (EGPC) was formed and became the major operator in the form of joint ventures with foreign companies. In 2000, the Ministry of Petroleum, headed by H.E. Eng. Sameh Fahmy (Minister of Petroleum in Egypt) took promising measures to face-lift the petroleum sector in Egypt. This was marked by a complete restructuring of the industry and the separation between natural gas and petrochemicals activities and those of the Egyptian General Petroleum Corporation (EGPC). The reformation resulted in the establishment of EGAS, ECHEM and GANOPE, creating a new structure of the petroleum industry in Egypt. This restructuring releases EGPC from its gas and petrochemical activities and allows it to focus more on the oil sector.

At the beginning of 2007, the Shura Council’s Industrial and Energy Committee approved nine agreements for oil and natural gas prospecting in the areas of the Gulf of Suez and the Western and Eastern Deserts. The amount of investments for these agreements account for approximately $222.65 million, said Shamel Hamdy, the First Under-Secretary of the Ministry of Petroleum. One of the major contracts sealed during the first half of 2007 is the WTR- Gulf of Suez Petroleum Company (GUPCO) deal. Through this two-year contract, Aberdeen-based WTR is to provide the materials and the installation of cold repair for leak fixation in the areas of the Gulf of Suez, the Western Desert, Port Said, Dashour and Ras Bakr, where GUPCO owns production rights along with its partners BP and EGPC. In the framework of the ministry's strategy to expand the usages of natural gas in all the Egyptian governorates, the Arab International Bank (AIB) sealed a loan agreement with the Egyptian Natural Gas Holding Company (EGAS) in order to finance the installation of two gas supply lines from Taba to Sharm El Sheikh and Shokair to Hurghada with a total value of LE 355 million and $90 million (LE 512 million). This loan agreement is provided by a consortium of eight banks which include the AIB; Societe Arabe Internationale de Banque, Egyptian Saudi Finance Bank, Piraeus Bank, United Bank of Egypt, National Bank for Development, the National Bank of Abu Dhabi, and the Audi Bank. The main target of this project is to supply six million housing units over the next six years with natural gas with LE 30 billion total investment. This is not the sole contribution of banks in projects related to the oil and gas sector.

The Ministry of Petroleum (MoP) exerted enduring efforts to bring into play the area of Upper Egypt and its attempt to benefit from its concealed reserves. Dana Gas is one of the leading corporations that have served the ministry's strategy. Through a farm out agreement, the Middle East’s first regional private-sector natural gas company and Kuwait International Oil & Environment Company (KIOEC), a subsidiary of TAQA Holding and Gulf Oil Investments are to partner Dana's Komombo Concession, situated in Upper Egypt, 800 km south of Cairo. Dana already conducted technical evaluation of the concession, including "the interpretation of geological and geophysical data and the acquisition of 516 Km's of 2-D seismic," announced the company in a statement. This technical evaluation led to the identification of drillable prospects and four addition leads. The new partners are to share the drilling works which were scheduled to begin in mid 2007.

The year 2007 also witnessed the revival of gold in the sector. “Egypt revives its Gold fortune…” was one of the key strategies and quotes adopted by the MoP, which is to resume the program of gold mining after a halt of more than 50 years. As a debut, Fahmy signed a memorandum of understanding with the International Finance Corporation (IFC), the private arm of the World Bank, to replace the old mining laws that contributed to the lack of local investments in general and foreign investments in particular.

Related Topics
- For a wrap-up account of the year 2007, we recommend you download Egypt Oil & Gas Newspaper December 2007 issue http://www.egyptoil-gas.com/archive.php
- For more information on the Energy industry in Egypt (2005), we recommend you purchase Egypt Report 2005
- For detailed information on the Egyptian Rig Market (2007), we recommend you purchase Egypt Rig Market Report 2007