Egypt approves R-Factor profitability model to boost energy exploration

Egypt’s Cabinet approved the application of the R-Factor profitability model in selected petroleum agreements on Wednesday, as part of efforts to boost exploration and attract investment in frontier areas, including the Mediterranean.

The decision was made during the Cabinet’s forty-fourth meeting, chaired by Prime Minister Moustafa Madbouly. Officials said the model would be applied under specific criteria tailored to the characteristics of each concession area.

The R-Factor system, which adjusts the contractor’s share of production based on project profitability, is expected to serve as a key incentive for international energy firms to engage in serious exploration efforts. Authorities said the move could help unlock untapped reserves and increase domestic gas supply, particularly in areas with no prior exploration or geological data.

As part of the rollout, the Cabinet also approved amendments to the production-sharing agreements for the Masry and Cairo offshore blocks in the Mediterranean, held by ExxonMobil and the Egyptian Natural Gas Holding Company (EGAS), to incorporate the R-Factor model.

The measure is aligned with Egypt’s broader strategy to draw fresh investment into its oil and gas sector by offering more flexible contract terms and promoting opportunities in underexplored regions.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser