The oil and gas industry plays a key role in the Egyptian economy and supports several key chemicals sectors, including fertilizers, petrochemicals and polymers. However, increased domestic demand and maturing of the major oil fields has resulted in Egypt becoming a net importer of oil.

The Egyptian government is attempting to counter this by:

• Encouraging increased exploration, enhanced oil recovery and an increase in the domestic consumption of gas;

• Offering attractive exploration terms and improved incentives to foreign companies, which have included the provision of larger exploration blocks, increased cost recovery allowances, and increased agreement periods;

• Awarding concessions to major multinational companies for large deepwater areas off the Mediterranean coast and in the Western Desert.

Discoveries of significant natural gas deposits have now led many to believe that the future of Egypt's petroleum industry will be in natural gas rather than crude oil. As a result, Egypt is gearing up in the hope of becoming a major world-class natural gas producer and exporter. Production nearly doubled between 1999 and 2002, and the rapid rise in natural gas reserves has led to a search for export options. These developments have initiated a major drive to undertake large capital investments in pipelines and other infrastructure needed to move gas to export markets in the region.

In the downstream oil sector, Egypt has one of the strongest refining industries and one of the largest markets for lubricants in Africa, accounting for a significant portion of the continent’s demand for lubricants. 

The Egyptian government maintains control on the industry through the Egyptian General Petroleum Corporation (EGPC) and the Egyptian Natural Gas Holding Company (EGAS), formed in 2001 to play a similar role in the natural gas sector. Nevertheless, all oil and gas exploration and production are either managed as joint ventures or production sharing agreements with major multinational companies.