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Egypt’s oil and gas sector shows bright spots

11 February 2026

 

The discovery of the supergiant Zohr gas field in the eastern Mediterranean by Italian energy major Eni in 2015 created the possibility of Egypt becoming a regional gas hub and a major exporter.

When Zohr entered production in 2017, Egypt’s Ministry of Petroleum & Mineral Resources said the field would produce 2.7 billion cubic feet a day (cf/d) until 2039. However, after rising to a peak of about 3.4 billion cf/d in 2019, output from the offshore field began a steady decline. Reasons cited include early overproduction and Eni and its partners reducing activity in response to Cairo’s delayed arrears and other payments.

Production at Zohr now stands at about 1 billion cf/d, accounting for roughly a fifth of Egypt’s total gas output. With domestic power demand surging, Egypt has made urgent, concerted efforts to ensure local and international operators ramp up production of both natural gas and crude oil to reduce the country’s import bill.

In addition, the Ministry of Petroleum & Mineral Resources, led by Karim Badawi, is overseeing a major five-year exploration campaign to increase Egypt’s hydrocarbon resources and, in turn, support production growth.

Exploration drive

The strategy involves drilling up to 480 wells over the next five years, including 101 wells in 2026 alone. The drilling programme is estimated to require total investment of $5.7bn, with the ministry primarily courting overseas majors.

Over the past few months, Egypt has secured investments – or at least commitments – from international exploration and production (E&P) companies, including an $8bn pledge from Eni and a plan by the UK’s BP to invest $5bn in the upstream sector.

In November, Arcius Energy, a 51:49 joint venture of BP and Abu Dhabi National Oil Company’s (Adnoc) international arm, XRG, signed a deal to acquire the Harmattan gas discovery offshore Egypt.

As part of the development plan for the prospect, located in the El-Burg offshore concession, Arcius Energy will invest $3.7bn to drill up to three wells and build infrastructure, including a fixed offshore platform connected by a 50-kilometre pipeline to onshore processing facilities near Port Said. Production is expected to start in 2028.

UAE-based Dana Gas recently reported progress in 2025 on its $100m capital expenditure (capex) plan under a concession agreement it signed with Egypt in late 2024. During 2025, the company drilled four wells and completed a workover programme on three additional wells, adding approximately 30 million cf/d of new production and 36 billion cubic feet of reserves.

Dana Gas plans to drill a further seven wells in Egypt during 2026 under its capex programme. The first of these, the Daffodil exploration well, was spudded in January.

Separately, in November, the Ministry of Petroleum & Mineral Resources launched a new bid round for oil and gas exploration in four Red Sea blocks. Run by the state-owned South Valley Egyptian Petroleum Holding Company (Ganope) via the Egypt Upstream Gateway (EUG) digital platform, the round marks the first time Egypt has offered E&P companies a profitability-based production-sharing model.

Chemical investments

Beyond the upstream sector, several petrochemical and speciality chemical projects in Egypt have also advanced in recent months. The largest is a planned $2bn project by Egypt-based Anchorage Investments to establish a petrochemicals complex in the Suez Canal Economic Zone (SCZone).

Under the terms of a memorandum of understanding (MoU), the Suez Canal Authority will take an equity stake in the Anchor Benitoite complex, to be developed in Ain Sokhna in the northwest of the Gulf of Suez.

The facility will be built on land owned by the Suez Canal Authority. It will include a propane dehydrogenation (PDH) unit and a polypropylene (PP) plant with a capacity of 750,000 metric tonnes a year (t/y), according to a Suez Canal Authority statement.

The authority said the facility represents the first phase of a larger project and will support future expansion into downstream and complementary industrial units. Future phases are expected to include integrated chemical facilities, with an estimated investment of about $4.5bn and a targeted output of 1.9 million t/y of chemical products.

Meanwhile, the Egyptian government is seeking to accelerate an estimated $680m project to develop a new soda ash facility. In November, the cabinet granted the state-owned Egyptian Soda Ash Company a ‘golden licence’ to develop the plant, which will also produce soda ash derivatives.

A golden licence is a single cabinet approval that consolidates multiple permits into one, in an effort to speed up project delivery. It covers permits relating to land allocation, construction, operation and management.

The plant is expected to produce 600,000 t/y of soda ash and derivatives, making it one of the largest industrial projects of its kind in the region. The project is being developed on a 1.12 million-square-metre plot in the industrial zone of New Alamein City.

Last February, China National Chemical Corporation was appointed as the project’s main contractor.

Separately, China National Chemical Engineering Group Corporation (CNCEC) No. 16 Chemical Construction Co. signed a land purchase agreement with the Suez Canal Authority this February to establish another soda ash manufacturing facility.

To be developed in three phases in Ain Sokhna, the complex will have the potential to produce up to 30,000 t/y of soda ash.

MEED’s March 2026 report on Egypt also includes:

> GOVERNMENT: Egypt adapts its foreign policy approach
> ECONOMY & BANKING: Egypt nears return to economic stability
> POWER & WATER: Egypt utility contracts hit $5bn decade peak
> CONSTRUCTION: Coastal destinations are a boon to Egyptian construction

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Indrajit Sen

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