Adnoc Drilling Targets Egypt’s Oilfields

Egypt’s plan to produce more oil and gas at home is set to receive support from the United Arab Emirates as Adnoc Drilling works to secure partnerships with Egyptian state-backed petroleum companies.

The company, listed in Abu Dhabi, wants to expand its activities in Egypt through agreements with the Egyptian General Petroleum Corporation and its subsidiaries.

The proposed partnerships were discussed in Cairo during a meeting between Adnoc Drilling chief executive Abdullah Al Messabi and Egypt’s petroleum minister, Karim Badawi.

The talks start as the government pursues foreign capital for its oil and gas industry and places increased drilling within its five-year production programme.

Badawi has said drilling more wells is one of the pillars of the ministry’s plan to raise domestic supplies of crude oil and natural gas.

The proposed entry by Adnoc Drilling could therefore place another major Gulf energy company within Egypt’s upstream petroleum industry.

Al Messabi also pointed to the company’s existing collaboration with the Egyptian Drilling Company, which carries out oil and gas drilling work in Egypt and abroad.

The discussions in Cairo build on contacts between the two countries’ energy sectors.

In July, Badawi met Adnoc chief executive Sultan Al Jaber in Abu Dhabi, where they discussed plans to raise UAE investment in Egypt’s energy industry.

Egypt’s drilling plans gain UAE backing

Adnoc’s interest in Egypt comes after Cairo cleared all outstanding payments owed to international oil and gas companies last month, a development expected to encourage investment in the sector.

The country is looking to attract companies capable of helping it raise domestic production through new wells and field development.

Adnoc’s business interests are already reaching into Egyptian waters through Arcius Energy, a joint venture between Adnoc unit XRG and British energy company BP.

Arcius Energy is preparing plans for the Harmattan gas field project and intends to begin drilling at the Atoll West exploratory well in the Mediterranean basin.

Those projects are separate from the proposed partnerships now being pursued by Adnoc Drilling with Egypt’s state petroleum companies, but together they show the expanding presence of Adnoc-linked businesses in the country’s oil and gas industry.

Adnoc Drilling itself has also been expanding its business from the UAE.

The company is controlled by XRG, Adnoc’s international investment arm, which owns 78.50 per cent of the drilling firm.

Adnoc said in May that it planned to award contracts worth AED200 billion, or $55 billion, over the next two years to support expansion across its upstream and downstream businesses.

The scale of that spending plan provides a picture of the wider expansion being pursued by the UAE energy group, even as Adnoc Drilling examines new opportunities in Egypt.

Shares in Adnoc Drilling, which has traded on the Abu Dhabi Securities Exchange since October 2021, closed 0.2 per cent higher at AED6.16 on Friday.

The stock has gained more than 15 per cent so far this year.

No agreement with EGPC was announced after the Cairo discussions. However, the talks placed Adnoc Drilling among the companies examining a larger presence in Egypt at a time when the country wants more wells drilled and more investment directed into domestic oil and gas production.