Egypt has signed a $42 million natural gas exploration deal with Cheiron for the East Alexandria offshore block in the Mediterranean Sea, as Cairo pushes to raise domestic gas production and cut its reliance on imports.

The state-owned Egyptian Natural Gas Holding Company, known as EGAS, and the Egyptian exploration and production company Cheiron signed the agreement on Monday 9 November. Cheiron has committed to a minimum investment of more than $42 million to drill three exploration wells and reprocess seismic data in the block, according to a statement from Egypt's Ministry of Petroleum and Mineral Resources.

Petroleum and Mineral Resources Minister Karim Badawi witnessed the signing. EGAS's executive managing director signed for the holding company and Cheiron's chief commercial officer signed for the company, in the presence of Cheiron chief executive David Chi. The ministry statement was carried by the State Information Service.

A block awarded in 2025

The East Alexandria offshore area was one of the blocks EGAS offered in an international bidding round, and the award to Cheiron was first announced in June 2025. The signing formalises an agreement that has already passed through Egypt's parliament: the Energy and Environment Committee of the House of Representatives approved a draft law authorising the minister to conclude the exploration and production agreement.

Under the draft law reported by Egypt Oil and Gas, EGAS receives a non-refundable signature bonus of $1 million, and the contractor commits to a minimum investment of $42.2 million, including the drilling of three exploration wells and the reprocessing of seismic data. The agreement sets a cost recovery ceiling of 40 percent, while EGAS's share of profit oil and gas ranges between 64 and 70 percent, depending on production levels and Brent crude prices.

The ministry statement announcing the signing does not give well depths, the size of the block or a drilling timetable. It says the work is aimed at assessing the area's potential and opening up new prospects for discovering additional natural gas resources.

Egypt's push for more gas

The deal is part of a wider Egyptian effort to expand exploration and bring new gas into production. The petroleum ministry has said Egypt put 591 new wells into production and made 113 discoveries between July 2024 and June 2026, and it has been offering new concession areas to international and local companies through regular bidding rounds.

Cheiron, headquartered in Cairo, is one of Egypt's largest independent oil and gas producers, with operations across the country. Badawi praised the company's role in exploration, development and production in Egypt at the signing, according to the ministry.

Egypt's gas balance has been under pressure in recent years as domestic demand has grown and output from some older fields has fallen, leaving the country importing gas at times despite its large offshore reserves. New exploration in the Mediterranean, where Egypt's biggest gas finds have been made, is central to the government's plan to reverse that trend.

The East Alexandria block sits in waters that have already produced some of Egypt's most important discoveries. Whether it holds commercial quantities of gas will only become clear once Cheiron drills the three wells and completes its seismic work. For now, the agreement is a vote of confidence in the area's prospects, and another step in Egypt's campaign to attract investment back into its upstream sector.