Russia’s Novatek Exits Egypt Due To Instability

Russia’s leading independent natural gas producer, Novatek OAO (MCX:NVTK) (LON:NVTK), has decided to exit the Egyptian market and end its operations worth US$40 million due to the country’s political instability and the deteriorating security conditions, says Anatoliy Chomachka, the Trade Representative at the Russian embassy in Cairo.

Novatek has decided to end its production activities starting by the beginning of the course of 2013.

It is worth noting that the Russia-based Novatek has acquired a 50% interest in a concession for an offshore block in Egypt’s Al-Arish in 2007. It began exploratory drilling at Al-Arish offshore prospect at the end of 2009 and announced it would pump almost $40 million in drilling activities up until 2012.

Russian gas producer evacuated some its staff during the events of the Egyptian revolution and its drilling activity was halted at several times in Al-Arish region.

Chomachka further stated that the volume of Russian investments in the Egyptian market has remarkably shrunk during the past two years due to the deteriorating security conditions and political rifts.

“This is just another missed investment opportunity for Egypt; the country has witnessed the withdrawal of major investments since the January 2011 uprising,” Chomachka added

Consequently, the Trade Representative at the Russian embassy in Cairo has stressed the necessity of signing a cooperation agreement between the two countries for the purpose of preserving the common investments and the availability of the Egyptian government support to encourage and secure the Russian investments.