Egypt began sourcing for oil outside its own borders for the first time after Egypt General Petroleum Corporation (EGPC) signed an agreement with Kuwait Energy for part of a concession in Iraq, the Egyptian oil minister said on Wednesday.
Kuwait Energy will give up 10 percent of a concession in Basra, southern Iraq, for exploration by the Egypt’s state oil company, Oil Minister Tarek al-Mullah said in a statement. “The agreement opens up the space for the oil sector to find sources of oil outside Egypt for the first time, following the example of many other countries,” Mullah said.
Egypt has gone from exporting energy to being a net energy importer as domestic production has failed to keep pace with rising demand. The government had been seeking alternative solutions to help the country cope with its worst energy crisis in decades.”This is an important step for securing energy supplies from outside Egypt in order to partially meet the demands of the local market,” said Mullah.
Production in the concession area’s first well, Fayhaa 1, is expected to begin in October with an initial return of 5,000 barrels per day (bpd) with the number expected to reach 150,000 bpd by 2020-21.
It is noted that Iraq were indebted to Egypt as of 2014, but negotiations on payback terms for $1.7bn of debt was agreed by a joint Iraqi-Egyptian committee which reached an agreement on January 20. The Iraqi prime minister, Haider al-Abadi, had travelled to Cairo earlier on the month. Mohammad Hassan, a member of the Oil and Energy Committee in the Iraqi parliament, described the payback deal to al-Araby (a local newspaper) as important, saying it ended a financial dispute between the two countries that began at the end of the first Gulf war. He said the deal would be formalized in Baghdad soon after.
Egypt and Iraq bilateral relations have steadily improved in recent years, and Egypt is now one of Iraq’s main trade partners.No details, however, were given about the value of EGPC’s investments in the oil field in Basra or what its role would be alongside the two other shareholders.