As relations between the two states continue to improve, Madbouly signed 15 new agreements in Baghdad in November. Egyptian President El-Sisi has given his encouragement for greater cooperation from the Egyptian side, to ensure these agreements are implemented quickly and effectively. This comes as part of his plan to enhance the Arab national role.
The oil-for-reconstruction plan comes after the October Egyptian-Iraqi Higher Committee which concluded with the objective to strengthen economic diplomacy between Egypt and Iraq.
Prime Minster Madbouly also signaled a greater number of joint ventures between Egypt, Iraq, and Jordan, which will follow a tripartite summit in early 2021. Egypt is expected to outline several development projects across several different industries going into the conference.
Egyptian factories have shown enthusiasm about agreement, with meetings commencing last week to explore the potential for greater trade opportunities. Several industries could benefit substantially from the agreement, including housing, infrastructure, electricity, agriculture, and health.
Egyptian Minister of Petroleum Tarek El-Molla highlighted some of the challenges for Egypt’s energy sector this year, as support for petroleum products decreased by 46 percent at the start of the 2020-21 fiscal year. Greater cooperation with other states as well as the potential for investment in Egypt’s industries will help strengthen the country’s energy sector as well as the economy as a whole.
The agreement is encouraging for Iraq’s energy sector which has faced a turbulent half a decade. Royal Dutch Shell Plc. and Exxon Mobil Corp. have pulled out of oil commitments in Iraq in response to security concerns in the region, leaving room for China to take a stake in Iraq’s West Qurna 1 field. However, in a recent delegation El-Sisi expressed his intention to help Iraq overcome challenges in order to preserve its security and stability.
Egypt’s once-booming oil industry now relies heavily on oil imports from the OPEC states. While Egypt produced around 4.5bn barrels in 2010, this figure dropped to 3.3bn barrels, or 670,000 bpd, in 2018. Egypt’s dwindling oil supply and mature wells led it to be a net oil importer in 2006.
Nonetheless, since achieving greater political stability from 2013, greater efforts have been made to increase the country’s oil exploration activities. Egypt has come to rely heavily on new technologies for oil extraction, including beam pumping, electrical submersible pumping and gas lift since less than 10 percent of the Egypt’s 200 wells now naturally produce oil.
In January this year, Egypt signed two deals with Exxon Mobil Corp for oil and gas exploration in the Mediterranean. The anticipated investment was $332 million, with Exxon acquiring over 1.7 million acres. Exploration was expected to start in the North East Amriya block, as well as the North Marakia block.
Interest in Egypt’s Mediterranean came following the discovery of the huge Zohr field in 2015 by Italian company Eni. Exxon’s exploration aims have been partially halted due to challenges associated with Covid-19. However, the projected increase in oil demand in 2021 could see greater progress on these projects.
The new agreement as well as the promise of further joint ventures in the region seek to strengthen several of Egypt’s industries. Additionally, support from Egypt to stabilize Iraq’s energy sector could see greater regional cooperation and external interest in both Iraqi and Egyptian oil.
This article is reproduced at oilprice.com