Political instability in Egypt did not impede the possibility of greenfield foreign direct investment (FDI) in the country’s oil and gas sector, an Economic Research Forum (ERF) supported research paper has shown.
The paper studied the effect of political instability on FDI in the Arab world, with research conducted by Martijn Burger, Elena Lanchovichina, and Bob Rijkers.
The paper pointed out that companies including Emirati Dana Gas and Italian EniSpA have announced recent major investments in the oil and gas sector despite Egypt’s uncertainties.
FDI in Arab countries was negatively affected, however, in non-oil manufacturing activities, due to revolutions and instability, the paper highlighted. This has been applicable in countries like Egypt, Tunisia, Syria, Libya and Yemen.
The research also concluded that investments in tradable non-resource manufacturing and commercial services relatively decrease with political instability. On the other hand political unrest has had no effect on investors when taking the decision of funding non-tradables and natural resources.
In 9 December 2013, Mohammed Shoaib, oil expert and managing director of Citadel group energy department said the oil and gas sector is the only sector that was unaffected by the events following the 25 January Revolution. He indicated that the reason behind this was the fact that work sites and oil fields were located far from the unrest.
In November 2013, Minister of Petroleum Sherif Ismail signed nine agreements in the natural gas and oil exploration field worth investments of $470m. The agreements were signed with Shell, BICO, Greystone, Petzed and the Egyptian General Petroleum Corporation (EGPC).