EXECUTIVE SUMMARY
Since 2011, political and economic instability in the country have negatively impacted Egypt’s oil, gas and petro- chemicals sector. Disruptions in exploration activities, production and exports resulting from ongoing violence and political turmoil and the Egyptian government’s increasingly dire financial situation has led to non-payment of suppliers and contractors and shortages of petroleum products in the local market. However, there is optimism that the sector could witness a recovery as Egypt’s economy gets back on track and new discoveries within the country’s hydrocarbon sector are exploited. Between 2013 and 2018, the government signed around 95 oil and gas agree- ments worth an estimated US$ 15.5 bn. The COVID-19 pandemic temporarily put downward pressure on the sector in light of stagnating global demand and underlying production constraints, with foreign direct investment (FDI) to the sector plummeting by 26% in 2020-21. Nevertheless, industry activity remains resilient, with nine petroleum agreements totalling investments of more than US$ 450 mn signed in 2020.
During the last decades, the Egyptian economy has made great strides, managing to capitalize on the country’s natural wealth, appeal as a tourist destination and young, educated population to generate economic growth, industry and investment in key economic sectors. Although Egypt’s legacy of state socialism and political authori- tarianism has hindered the country’s ability to build an equal opportunity economy, the Egyptian government has, in recent years, shown a willingness to cooperate with local and international investors to facilitate economic expansion, and to engage in public-private partnerships to push forward infrastructure and other development projects. Since 2016, renewed emphasis on economic policy reform under the al-Sisi regime has strengthened investor confidence, particularly under it’s 3-year US$ 12 bn loan agreement with the IMF which concluded in 2019. While the full impact of these initiatives remains to be seen, a recent series of monetary, fiscal and structural reforms, including the gradual phasing out of energy subsidies, are promising.