Confidence Returning As BP Eyes Major Investment
BMI View: A victory for el-Sisi at the upcoming Presidential election in Egypt will boost the confidence of investors in the oil and gas sector, with BP expected to initiate a major investment programme. In particular, a focus on the company's West Nile Delta project would see a major boost to domestic gas supply from 2015, curbing the country's energy shortages.
Instability in Egypt over the last few years has kept significant capital investment away from Egypt. This is largely due to the political climate not providing a sufficiently stable environment to mitigate the risk of the billion-dollar investments needed to boost new oil and gas production. Investment has also been dissuaded by delayed payments for gas and the prioritisation of gas away from liquefied natural gas (LNG) exports to the less lucrative domestic market. Our Middle East Country Risk Analysts expect an el-Sisi victory at the upcoming presidential elections at the end of May 2014, which we believe will create a more stable investment environment.
With sentiment improving regarding political stability in Egypt, we have seen a number of smaller oil and gas companies return to the country ( see 'E&P Incentives Boosted As Threat Of Increased Imports Looms', March 7). However, it now appears major oil and gas companies are ready to return with BP reportedly outlining a USD1.5bn investment plan for the country, according to Middle East News Agency (MENA). While Prime Minister Ibrahim Mahlab and BP representatives met in Cairo on May 11, BP has yet to confirm the investment plans.
|Exports Snuffed Out|
|Egypt Natural Gas Production, Consumption & Net Exports (bcm)|