Egypt is struggling to make at least minimal payments to IOCs in the hope this will lead them to sanction long stalled upstream investment and stem recent sharp falls in exploration activity and oil and gas output. Egypt’s oil production fell to 658,000 b/d in January, the lowest level for almost three years. The fall in gas output has been even more precipitous – volumes are down 8% on a year ago and the lowest since 2008. Meanwhile, the number of drilling rigs active in Egypt collapsed to 49 for February, down from an average of 72 for the first half of 2012, according to data compiled by US services firm Baker Hughes.

Although few companies have intentionally cut production, Egypt’s typical high field decline rates mean continuous drilling is often required just to maintain volumes. Reduced investment over the past year or so has gradually worked its way through into falling output. Increased industrial unrest post-Revolution has also hit production. (CONTINUED - 961 WORDS)