Oil companies evacuate staff but upstream activities continue in Egypt

By Samuel Ciszuk, Middle East energy analyst at IHS Global Insight

Shell told Platts that "non-essential" staff and their dependents had already been evacuated, with "a number of senior and key personnel, including the Shell Egypt country chair" remaining. BP has begun an evacuation with a seemingly similar scope, the news agency learned from its Cairo security staff, while LUKoil undertook an evacuation of its expatriate staff yesterday, and Novatek launched evacuation procedures today, according to Russia's RIA Novosti news agency.

BG Group too has evacuated all "non-essential, non-Egyptian staff" according to the website of UK daily The Guardian, also reporting that the company has suspended one exploration drilling -likely after deciding not to fly in any new staff at the moment.

Egypt protests intensify

Protests against Egypt's long-time president. Hosni Mubarak intensified last week, spurred by the recent popular uprising that deposed President Zine al-Abidine Ben Ali from Tunisia earlier this month, and have accelerated into looting and vandalism in some of the country's main cities over the past three days following the temporary withdrawal of Egypt's police from the streets.

Upstream operations, however, continued unabated both onshore and offshore, with production and export facility installations, as well as downstream facilities, located out of the reach of normal street protests, which, apart from some looting, are focusing on peaceful anti-government protests. It is also believed that Egypt's powerful army will guarantee the security integrity of strategic upstream and downstream installations, should any threats materialise.

Significance to oil and gas sector

The levels of unrest, particularly during the last three days, have rattled oil companies as well as global oil markets, as fears have started to rise over the Egyptian regime's stability, leaving most watchers with a deep uncertainty over what potential regime could emerge. The withdrawal of Egypt's police from the streets of some of the major cities was particularly unsettling, although the widely respected army instead moved in to uphold a basic level of security, not allowing rioting to threaten any vital government institutions or people, although also not preventing looting and vandalism from severely rattling Egypt's urban middle and upper classes.

Egypt's vast police and security forces have now returned to the streets, potentially allowing the government to cast themselves as the guarantors of stability and safety to a wide enough part of the population. The main message so far, however, might be that the army will remain with a firm grip of the overall situation, whether or not the president in the end has to step down and some form of coalition government, palatable to the army's leadership.