China Looks To Derail The West’s Strategy To Replace Russian Gas Supplies

China’s North Petroleum International Company (NPIC) last week signalled its intention to dramatically increase its presence in Egypt’s energy sector. An initial US$100 million is earmarked to acquire new concessions and establish partnerships in the gas and oil sectors of Egypt’s Western Desert and offshore areas, according to comments the firm’s regional director Sun Bao. This funding is only the opening salvo in a planned investment push from China into the strategically crucial country, a senior source in the European Union’s (E.U.) energy security complex exclusively told OilPrice.com last week. “Beijing has set aside billions of dollars to build its presence in Egypt starting from now, which will initially focus on the energy sector before broadening out into the range of other projects commonly seen in priority one BRI [‘Belt and Road Initiative’] targets,” he said.

Perhaps the main reason for China’s interest in significantly expanding its presence in Egypt is that the country became a key focus of the West’s attempts to secure gas supplies to help compensate for those lost from Russia following its invasion of Ukraine on 24 February 2022, and so it remains. U.S. and European investments poured into the country that holds a uniquely strategic position as part of North Africa, the Middle East and the Eastern Mediterranean, beginning most notably with Chevron. The oil and gas behemoth quickly expanded on its initial presence there before announcing in December 2022 that it had hit at least 99 billion cubic metres of gas with its Nargis-1 exploration well in Egypt’s eastern Nile Delta, about 60 kilometres north of the Sinai Peninsula. Following that, Italy’s Eni announced a potentially huge offshore gas field in its concession area in the Red Sea focused as well on the Nargis-1 site. According to the president of Chevron International Exploration and Production, Clay Neff: “The East Mediterranean has abundant energy resources, and their development is driving strategic collaboration in the region.” These entry points effected into Egypt’s gas sector by the U.S. and Europe have since been broadened and deepened by the U.K.’s Shell and BP. The latter said recently that it will invest US$3.5 billion in the exploration and development of Egypt’s gas fields in the coming three years. This amount could be doubled if the exploration activity yields new discoveries. Meanwhile, Shell began the development of the tenth phase of Egypt’s Nile Delta offshore West Delta Deep Marine (WDDM) concession in the Mediterranean Sea. This came after the British firm and its partner had developed the previous nine development phases of the WDDM concession that comprises 17 gas fields.