In its first foreign venture, the state-owned Egyptian General Petroleum Corporation (EGPC) will search for oil in southern Iraq.
In a Wednesday statement, Petroleum Miniser Tarek al-Molla announced that the Kuwait Energy company has given the EGPC rights to a 10 percent stake in the Block 9 concession in Basra.
The deal is aimed in part at securing oil supplies to meet Egypt’s demand. “It is an important step toward securing oil supplies from outside of Egypt to meet part of the needs of the domestic market,” Molla said.
Once an energy exporter, Egypt is now a net importer, and the country’s rising import bill has put a strain on the budget and left Egypt with billions of dollars in arrears to foreign oil companies.
The deal, which was initially agreed upon at the Egyptian Economic Development Conference in March, also aims to open up new opportunities for Egyptian oil companies to work outside of Egypt and to diversify areas of investment in the petroleum sector.
The first well in the concession is expected to begin production in October at 5,000 barrels per day, ramping up to 150,000 barrels per day by 2021, the Petroleum Ministry said.
Turkey’s state-owned TPAO originally held a 40 percent stake in the exploration block, with Kuwait Energy and the Dubai-based Dragon Oil each holding 30 percent. In January 2013, with diplomatic relations between Iraq and Turkey strained, Kuwait bought out TPAO’s shares, ending up with a 70 percent stake in the project.
The deal with Egypt will take Kuwait’s share back to 60 percent.
The technical and business details of the plan have not yet been finalized, Molla said. The Egyptian and Kuwaiti sides will be meeting to discuss details in the coming period.