Egypt’s state-owned gas company EGAS will hold an auction for eight oil and gas exploration blocks in the Mediterranean Sea, the Petroleum Ministry announced Sunday.
The offshore fields up for auction extend over 11,849 kilometers of Egypt’s Mediterranean waters, stretching across the Nile Delta and North Sinai.
The blocks include West Arish Marine, East Port Said Marine, North Romana Marine, North Ras al-Esh Marine, West Temsah Marine, South Tanin Marine, North Hammad Marine and East Alexandria Marine.
The news comes as Egypt scrambles to secure additional energy resources to cover a growing gap that has regularly left households, businesses and factories without power. Electricity cuts have been a persistent problem, even ahead of the summertime months when the demand for electricity spikes as millions of Egyptians try to cool their homes and workplaces.
Once an energy exporter, Egypt has turned to the global market to fill its energy demand. Since the November signing of a rental agreement for a floating terminal that will allow the country to import liquified natural gas, Egypt has issued tenders to buy 75 cargoes of LNG on the global market.
Egypt has also stepped up its efforts to lure international investors to develop the country’s oil and gas reserves. According to the Petroleum Ministry, since November 2013 Egypt has signed 56 new oil and gas exploration agreements, with minimal investments of US$12 billion.
Egypt’s government has sweetened the pot for potential investors by offering more advantageous terms for energy producers, including raising the prices it pays for its share of domestically produced gas.
This makes the country more attractive to foreign investors, but means the government has to pay higher prices to purchase its own natural resources.
It has also paid billions of dollars in overdue bills to petroleum companies, bringing its debts down to $3.1 billion by the end of December.
“We will have repaid a substantial amount of the arrears by the first quarter of 2015 to motivate our partners to intensify exploration and production activities. Through boosting local production of oil and gas, and thus minimizing imports, we will be able to spare the necessary cash to continue paying EGPC and [state-owned gas firm] EGAS due debts to [international oil company] partners,” said Petroleum Minister Sherif Ismail in an announcement in November last year.
According to Ismail, bidding rounds are key to achieving new gas discoveries and meeting Egypt’s growing domestic demand for natural gas and other petroleum products.