Population 94,904,218 Arabic (official), English and French widely understood by educated classes GDP (USD billions) $331

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2 MILLIONS About the country Population 94,904,218 Language Arabic (official), English and French widely understood by educated classes GDP (USD billions) $331 Currency Egyptian Pound Interest rates 14.8% Inflation 30.2% Imports from the UK (2016) 1,220,323,263 Exports to the UK (2016) 655,474,717 Labour cost (Avg. salary) Average salary in oil & gas for an Egyptian: $37,500 (1) Average salary in oil & gas for an expatriate: $105,200 (1) Freedom index 144 of 180 Doing business 122 of 190 Corruption 108 of 176 *As at March 2017 unless stated. (1)2014 estimates. Trade / business IMPORTS FROM / EXPORTS TO UK 1,400 1,200 1, Imports Exports Business sectors Trade by sector [Top 10 imports from the UK in 2016] Two Digit economic classification Imports from UK ( 000 s) 84 - Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof 313, Pharmaceutical products 113, Iron and steel 101, Electrical machinery and equipment and parts thereof; sound recorders and reproducers, 92, Edible vegetables and certain roots and tubers 79, Vehicles other than railway or tramway rolling-stock, and parts and accessories thereof 63, Aircraft, spacecraft, and parts thereof 60, Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof 48, Plastics and plastic products 47, Books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans 29,064

3 How to communicate English is the most commonly used foreign language however, it is advisable to have an Egyptian agent to conduct business. Your documents should include the Gregorian (Western) date and the Hijrah (Arabic) date. Meeting etiquette Use titles and surnames for initial greetings until invited to do otherwise. There are many greeting styles so it is safest to allow your counterpart to initiate the greeting. 1 Safety Terrorist attacks are not uncommon, particularly targeting the security forces and government buildings. There is also a heightened risk of terrorism against aviation. For the most up to date travel advice please visit: Visa requirements If you re entering Egypt for work or business it is preferable to get a visa before you travel. Some areas do not require a visa for visits up to 15 days. Tax and Local Requirements Corporate income tax: As of August 2015, the corporate income tax (CIT) rate in Egypt has reduced from 25% to 22.5% on the net profits of a company. Non-resident businesses pay tax on income derived from their permanent establishments (PEs) in Egypt whereas resident businesses pay tax on all profits. The 22.5% rate applies to all types of business activities except for oil exploration companies, whose profits are taxed at 40.55%. As of August 2015, the additional 5% surtax on income above EGP 1 million was scrapped. Sales tax: The standard rate of sales tax is 10%, with exceptions on various commodities. Customs duties: The individual or company who is importing goods from abroad is responsible for customs duty, which can range from 5% to 40%, with the exception of vehicles, alcoholic beverages and nonessential and luxury consumer goods which can be up to 135%. Machines and equipment imported as capital assets and to establish the company s project are charged at a 5% rate, however when imported on a temporary basis the rate is 20% of the original customs duty per year until exported. Customs duty on component parts is assessed based on the completed product with reductions dependent on the local content on the final product. Capital gains tax: Capital gains made on the sale of shares listed on the Egyptian stock exchange are subject to a 10% corporate income tax however this tax has been suspended until All unlisted shares are taxed at the standard corporate tax rate. Withholding tax: A 10% withholding tax is applied on dividends paid to a resident or non-resident entity. This is reduced to 5% when paid to a non-resident whereby the corporate recipient holds a minimum of 25% of the capital or voting rights in the payer company for at least 2 years. Interest paid to a non-resident is subject to a 20% withholding tax, unless the rate is reduced under a tax treaty. *Tax rates and accounting rules are subject to change so it is recommended that you seek professional advice before embarking on any activity that is likely to result in your incurring any liabilities in this regard. 1 Map provided by Vector Maps

4 Oil and Gas A data snapshot, 2016 (Offshore) Total Total as % Regional* Total as % Global* Rank Regional* Rank Global* Reserves (Mbble) 2 Capex 2016 (US$m) 9, of of 50 1, of of 50 Operational Fields (#) of 29 8 of 50 *Percentages and rankings are based on the countries within this series of reports and not of all countries. For a full list of the countries included within the series please see the Global report. Milestones in the oil and gas sector 1956 The General Petroleum Activity (GPA) is created 1962 GPA changes its name to Egyptian General Petroleum Corporation (EGPC) 1976 Egypt becomes a net exporter of crude oil for the first time G 2000 Government allows for the export of natural gas 2015 Discovery of the largest known gas field (Zohr) in the Mediterranean Map of production areas 2 P50 Reserves Reserves with a 50% and greater probability of being able to be produced. Figures are for reserves due onstream from 2016 onwards. 3 These are fields that are producing, shut-in or suspended. Shut in and suspended are included as they could potentially be brought back to production.

5 Examples of companies already operating in country Operators Fields / Activity US$m Capex ( ) Eni EGPC Eni and EGPC have established a joint venture (JV) (Petro Shorouk, a subsidiary of Petrobel) for the development of the super giant Zohr gas field. It was announced in February 2017 that Eni had completed the sale of a 10% interest in the Shorouk concession, which includes the Zohr gas field, to BP plc. Eni now holds a 90% stake in the license, while Rosneft, subject to government approval, has agreed to acquire a 30% stake. 4,779 BP BP EGPC IEOC SUMED EGPC Shell EGPC Petronas EGAS Others BP is a 60% operating partner in North Alexandria 1&2 development leases with RWE-DEA; Ruby development lease and West Med Deep Water exploration concession (80% with BP and 20% with RWE-DEA). BP is also developing the Atoll gas field and the West Nile Development (WND) project. In the Gulf of Suez, BP holds the Merged concession Area; South Belayim, South Gharib, North October and South Ghara (75% with IEOC). In the Nile Delta the company is a 50% partner with IEOC in Baltim, Hapy, Seth, Temsah, and Tennin development leases and Nidoco/El Qara (IEOC 75%, BP 25%). SUMED own the Sidi Kerir offshore terminal which is a bypass pipeline offering an alternative to The Suez Canal. Activity is predicted to increase as Iran re-enters the world market. 2,482 Egyptian General Petroleum Corporation provides oil and gas exploration, refining and production services through its subsidiaries. 99 Shell and Petronas are equal partners in the West Delta Deep Marine (WDDM) concession. EGAS are responsible for auctioning off exploration blocks and in 2015 held an auction for 8 blocks: West Arish Marine, East Port Said Marine, North Romana Marine, North Ras al-esh Marine, West Temsah Marine, South Tanin Marine, North Hammad Marine and East Alexandria Marine. EGAS are also involved in various fields through partnerships or joint ventures i.e. Atoll, Simian Sienna. Other operators currently working in Egypt include Zeitco (a JV between EGPC and Dana Petroleum), Khalda (a JV between EGPC and Apache) and Edison

6 Contractors Partner in country Activity Aker Petrobel In 2016, Aker Solutions was awarded an umbilicals contract by Petrobel for the Zohr gas field worth more than $122.3 million. The umbilicals system will be delivered by mid-april Technip OneSubsea Siemens Burullus Gas Company SAE (EGPC, BG Group & Petronas) VARIOUS: Pharaonic Petroleum Company (PhPC) (JV between BP & EGAS) / Belayim Petroleum Company (Petrobel) Elsewedy Electric and Orascom Construction What to consider before entering the market In 2010, Technip was awarded an EPC contract by Burullus for the West Delta Deep Marine worth in excess of $300 million. In 2014, OneSubsea was awarded a contract by PhPC for the supply of subsea production systems, wet gas flow meters, HIPPS and installation and operational spares for the East Nile Delta END-3 development. In 2016, OneSubsea was awarded a subsea EPC contract worth $170 million for the first stage of the development of the Zohr gas field. In 2015, Egypt s Elsewedy Electric and Siemens signed a $2.2 billion EPC contract to build a new combined cycle power plant at Beni Suef for the Government of Egypt. Subsea 7 BP & DEA In 2016, Subsea 7 were awarded a contract by BP, and partner DEA (Deutsche Erdoel AG), for the development of the Giza, Fayoum and Raven subsea fields as part of the second phase of the West Nile Delta project. The contract scope includes engineering, procurement, installation and precommissioning of the subsea infrastructure from twelve wells worth over $750 million. ThinJack Yadco Petroleum Services In 2016, ThinJack was awarded a contract by Yadco Petroleum for the removal of well christmas trees on surface platforms in the Gulf of Suez WorleyParsons Assiut Oil Oil Refining Company (ASORC) C Subsidiary of EGPC o m p In 2016, WorleyParsons was awarded an EPC contract for the next four years. The new project will result in the building of a new Naphtha complex, a CCR Reforming unit and an Isomerization Unit] that will provide gasoline. This element of your planning is vital and will vary depending on product, service, general business strategy and the country you are considering entering: Some things to consider: Is registration with an internal Government/Commission required? How do you register with an in-country oil firm to be one of their suppliers? Is pre-qualification required? If so, what is the process for this? Is it worth considering getting an in-country agent? What other options are available to you, for example: exporting, an in-country subsidiary, a joint venture partnership? It may also be worth registering with Achilles. The Achilles procurement portal is used across many countries and will help you be visible to the industry. By registering you are effectively ensuring you pre-qualify to be part of tender processes and this will help match you to potential buyers: For further information and to speak with a Scottish Development International (SDI) representative, please contact SDI via the contact details on the back of this guide.

7 Major Fields Zohr (gas) The Zohr field is estimated to contain 30tn cubic feet of gas which is the largest gas field ever discovered in the Mediterranean. The field was discovered by Eni in the Shorouk concession. Production is scheduled to begin in 2017 and will reach 2.6bncf/d by West Nile Delta (WND) Project The first phase of the WND will develop the Taurus, Libra, Giza, Fayoum and Raven fields, and later phases will develop the Maadi Viper, Ruby, Polaris and Hodoa. BP and RWE DEA will develop five trillion cubic feet (tcf) of gas and 55 million barrels (mmbbl) of condensate reserves from Phase I of the WND project. Estimates for the remaining undeveloped fields are approximately 5-7tcf. First production is scheduled to start in 2017, with peak production expected to reach 1.2 billion cubic feet a day (bcf/d) of gas, which is equivalent to approximately 25% of Egypt's current gas production. Nooros Discovered in 2015, production is around 65,000 boepd with a target to reach 140,000 boepd by the end of The field is operated by Petrobel, a joint venture between IEOC (Eni) and EGPC. BP holds a 25% stake in the concession and IEOC holds 75%. In September 2016 it was reported that Eni reached a record production of 700 million cubic feet of gas per day, or 128,000 barrels of oil equivalent per day, from the Nooros field and was anticipated to reach 880mmscfd by early Atoll (gas) Located in the Nile Delta, the development of the first phase of the Atoll (BP 100%) field has been accelerated to allow production to commence in The field is estimated to contain 1.5tcf of gas and 31 million barrels of condensates. Development of Atoll will be executed and operated by Pharaonic Petroleum Co. (PhPC), BP s joint venture with Egyptian Natural Gas Holding Company (EGAS) and Eni. The Atoll field is aiming for production in December It was reported in December 2016 that BP will invest $3.8bn on the development of the field to produce 300mcf/d of natural gas. Role of Government/Regulator The petroleum sector in Egypt is regulated by the Ministry of Petroleum through two principal companies: Egyptian General Petroleum Company (EGPC) Egyptian Natural Gas Holding Company (EGAS) A concession agreement must be obtained from the Ministry of Petroleum prior to extracting oil or gas. A typical exploration agreement lasts for seven to nine years which includes the initial term and two extensions. If a commercial discovery is made, the term may be 25 years with the option to extend up to 35 years. Oil and gas in Egypt, including territorial waters, belongs to the state and the extraction of oil and gas is regulated by the Egyptian Mining and Quarries Law 86 of However, the Egyptian government is planning to deregulate its natural gas market by gradual privatisation. In addition, the Ministry of Petroleum actively seeks investment from foreign investors through new oil and gas bid rounds. The law to establish a regulatory authority for the natural gas market is expected to be complete by the end of 2017.

8 Number of trees/platforms US$M US$M Activity and Opportunities (Offshore) Infrastructure (Units) Operational (2016) 239 Installations ( ) 8 7 fixed 1 floating (Units) Operational (2016) 131 Installations ( ) 47 Tree Awards (2016/2017) 15 Operational (2016) 5,316 Installations ( ) 760 Operational (2016) 1,236 Installations ( ) 762 (KM) (KM) $2,000 $1,500 Capex by Operator: Historic and Forecast Total Capex: Historic and Forecast $2,500 $2,000 $1,000 $1,500 $500 $1,000 $ $500 Eni EGPC Shell EGPC Petronas SUMED BP BP EGPC IEOC EGAS $ Axis Title EGPC EKH CIB Others Decommissioning Axis Title Dry Trees Wet Trees Fixed Platforms Technical Notes: Wet Trees Trees deployed subsea. Dry Trees Trees deployed on platforms. Capex Forecasts Infield Systems Capex forecasts are based on bottom up forecasting and as such is a full opportunity set of projects that could see spending over the forecast period.

9 Opportunity Hotspots Scale Capability in country Growing / declining Target for Scottish companies Drilling & Wells HIGH MEDIUM Reservoirs HIGH LOW Platforms & Topsides HIGH LOW Marine, Subsea & Pipelines HIGH LOW Integral & Support Services HIGH MEDIUM Decommissioning MEDIUM LOW Ease of accessing opportunities FCO advise against all but essential travel to the majority of Egypt. Freedom index, corruption index and doing business rank score indicate difficulties operating in country. Strong presence of international firms in Egypt. DID YOU KNOW? Oil consumption within Egypt has increased relentlessly over the past 50 years and has resulted in Egypt becoming a net importer of oil. However, Egypt aims to have a balanced gas market by 2018 and anticipates beginning to export gas by SE/SDI Contact enquiries@scotent.co.uk Telephone Nearest SDI office Scottish Development International 5 Atlantic Quay 150 Broomielaw Glasgow G2 8LU Local Embassy British Embassy 7 Ahmed Ragheb Street Garden City Cairo Egypt

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