Oil majors pull out of Red Sea, but Egypt’s energy ambitions stay afloat

Several multinational energy companies, including U.S. giant Chevron, have pulled out of their oil and gas exploration blocks in Egypt’s Red Sea after failing to make any viable discoveries, Egypt’s Ministry of Petroleum confirmed this week.

The exits mark a setback for Egypt’s efforts to transform the Red Sea into a key pillar of its energy hub ambitions.

The exploration rights for these offshore blocks were awarded in 2019 through Egypt’s first international bid round for the region, with winners including Chevron, Shell, and Mubadala Investment Company of the UAE.

Despite high expectations, the Red Sea blocks yielded no commercial finds. "Companies have spent millions on their concessions within the agreed time frames," said ministry spokesperson Moataz Atef. "One company spent $34 million on a contract that initially required only $10 million in investments, but found no results."

Chevron has confirmed that it relinquished its 45% operated stake in Red Sea Block 1. "Chevron remains committed to working with the Egyptian government and our partners to grow the country’s energy sector, especially through our exploration work in the Mediterranean," said Chevron spokesperson Sally Jones.

Shell, which operates Block 3 with partners including QatarEnergy and Australia’s Woodside Energy, declined to comment on its position. Mubadala and Woodside were not immediately available for a response.

Despite the setbacks, Egypt remains optimistic about the Red Sea’s untapped potential. "We still believe in the promise of these areas," Atef said, noting that both Shell and Chevron have since applied for new blocks in the Mediterranean.

Chevron currently holds interests in three exploration blocks in Egypt, two of which are located in the Eastern Mediterranean, an area that has seen increased attention following major gas discoveries over the past decade.

Meanwhile, Egypt’s natural gas production continues to decline. Output dropped from 4.6 billion cubic meters in January 2024 to 3.6 billion cubic meters in January 2025, according to data from the Joint Organisations Data Initiative (JODI).

With demand for electricity expected to soar during the summer months, the government is moving quickly to secure supply. 

Atef said Egypt is bringing in three to four floating storage and regasification units (FSRUs) to stabilize domestic gas availability, and that LNG shipments have already been secured.

Last year’s heatwave led to widespread power outages and a costly emergency response, with the government spending over $1.1 billion on energy imports. Officials say a contingency plan is in place this year to avoid a repeat.

Though the Red Sea may have disappointed for now, Egypt’s broader energy ambitions—anchored in the Mediterranean and LNG infrastructure—remain intact.