New oil and gas discoveries: more than hot air?
Egypt’s Ministry of Petroleum and Mineral Resources has struck an upbeat tone in a steady stream of announcements chronicling new discoveries: a gas field here, an oil find there, a rise in production from an oil well, or officials declaring the country is nearing self-sufficiency.
Yet none of this has translated into results on the ground. On the contrary, indicators show that gas production this year is at its lowest since 2023, while other data suggest that oil production in 2025 was the lowest since 1987.
The secret behind this contradiction is that most recent finds fall into the category of small wells. The gas reserves being announced are also tiny compared with the Zohr field, which helped Egypt achieve brief self-sufficiency for a few months in 2019.
Because gas production has declined since 2023, the country has had to rely on imports to plug a deficit estimated at about 1.2 billion cubic feet a day.
Do the numbers matter?
A tally by Al Manassa, based on data issued by the Ministry of Petroleum, shows that the ministry announced 24 new oil and gas discoveries between 2023 and 2026, two-thirds of which were oil discoveries.
Crude oil discoveries were concentrated in the Western Desert, which accounted for 55%, followed by the Gulf of Suez at 25% and Sinai at 20%. A source familiar with these explorations at the ministry told Al Manassa that despite their number, the discoveries have had a limited effect. Most are small and focused on developing existing fields rather than opening new ones.
While the government has repeatedly spoken of its ambition to achieve self-sufficiency in petroleum products, it has not reached that goal because refining capacity remains limited and crude oil is not available in sufficient quantities.
The picture is not much different for gas. Discoveries remain limited, which the source, who preferred not to be named, attributed to the effect of the dollar crisis on foreign companies’ appetite for investing in extraction. The government has, however, recently moved to address the problem by paying foreign companies their dues.
Egypt suffered a foreign-currency liquidity crisis in 2022 and 2023 following the rapid exit of foreign investment from local debt instruments under pressure from the risks of the Russia-Ukraine war. Liquidity conditions improved in 2024 after a large rescue package involving the United Arab Emirates, the European Union, the International Monetary Fund and other financing institutions.
Debts owed to foreign oil companies accumulated during the dollar crisis, reaching $6.1 billion in 2024. But the state has stepped up efforts to finish paying them by this July.
West Denise takes center stage
Although the source acknowledged that the recently announced discoveries were limited in size, they sent important economic and investment signals. “They reflected a return of confidence among global companies and encouraged them to resume exploration and development programs,” the source said, citing the Italian company Eni’s discovery this year of the West Denise field, which revived hopes for relatively large finds.
In April, the Ministry of Petroleum announced that the West Denise-1 exploration well, drilled by Eni in the Temsah concession area off the coast of Port Said, had reserves estimated at about 2 trillion cubic feet of gas and 130 million barrels of condensates.
Although these reserves are significantly larger than previously announced natural gas discoveries, they look small compared with Zohr, which Eni also discovered near Port Said and whose reserves amounted to 30 trillion cubic feet of gas.
Salah Hafez, a former vice president of the Egyptian General Petroleum Corporation, told Al Manassa that the West Denise discovery mattered because, unlike most recent announcements, it concerned a new field rather than one already in production.
West Denise is also relatively easier to develop, Hafez said. The field lies in relatively shallow waters, meaning it can be operated from onshore platforms. Zohr, by contrast, lies in deep water and required far higher investment and operating costs.
The Western Desert is the backbone of Egypt’s crude oil production
What is striking about recent oil discoveries, especially during the dollar crisis and the slowdown among foreign companies, is the emergence of activity by the local companies Khalda and Agiba. Petroleum analyst Mohamed Attia told Al Manassa that joint ventures between Egyptian and foreign production companies played a pivotal role in supporting Egypt’s petroleum sector in recent years, particularly amid the challenges linked to the accumulation of dues owed to foreign partners and its effect on investment and production plans.
Khalda Petroleum and Agiba Petroleum were established in the 1980s as joint ventures between the Egyptian General Petroleum Corporation, the US company Apache and Italy’s Eni. They are among the largest production companies in the Western Desert, the region that represents the backbone of crude oil production in Egypt, “making their performance a decisive factor in confronting the financing pressures the sector faced during periods of delayed payments,” Attia said.
Should we be optimistic?
The gap between production and consumption is pushing Egypt toward more costly alternatives, chiefly imports of liquefied natural gas. These imports increased during the wars on Gaza and Iran because of interruptions in Israeli gas supplies during those events.
Data from the first half of the 2025–26 fiscal year highlights the growing cost of these imports, which reached $11.5 billion between July and December 2025, compared with $9.6 billion during the same period of the previous fiscal year. The large import bill therefore provided the government with a strong justification for raising energy prices, most recently seen in the March increase in fuel prices.
Despite the limited scale of recent discoveries, Attia expects their effect to appear gradually, whether in narrowing the gap between production and consumption or in supporting future expansion plans.
The petroleum source said the recent discoveries should begin to bear fruit in the coming period. He noted that a field typically takes three to four years to reach peak production before beginning a gradual decline, adding that Denise’s production would peak at 400 million cubic feet a day, making it a significant contributor to Egypt’s production process.
The source supported the rapid announcements of discoveries, saying they send reassuring messages to global markets and energy companies that Egypt is moving ahead with improving the investment climate and settling its financial obligations. This would improve the country’s chances of attracting more foreign investment into the sector, and thereby increasing extraction.
Despite the optimism apparent in his remarks, an essential question remains unanswered: Will the new discoveries produce visible results, whether by increasing our output or cutting our import bill?