Egypt Oil Output Collapses As Firms Cut Investment

Unlike Gulf countries where NOCs dominate, Egypt is reliant on IOCs for upstream investment. New offshore gas developments – in particular Eni’s Zohr – have continued to attract cash despite global investment headwinds. But the country’s workhorse mature oil basins have not been so lucky.

Egypt’s oil output fell to 633,000 b/d in September, the lowest level in nine years, as international oil firms operating within the country continue to slash their spending.

Signs of a revival are scarce as IOCs from the US and Europe continue to dial back on spending as they see their finances whacked by low oil prices (MEES, 4 November). These include Egypt’s two biggest producers: Italy’s Eni (for gas and on an overall ‘oil equivalent’ basis) and US firm Apache (oil).

Egypt’s oil fields suffer from high decline rates so the fall-off in investment has rapidly translated into a steep drop in output: having peaked at 696,000 b/d in August 2015 it has since fallen by 9% (see chart 1). (CONTINUED - 1703 WORDS)