Apache Corp.: Developing oil and gas in Egypt, with the help of OPIC political risk insurance
Challenge Apache Corp., a major natural gas producer in Egypt, struggled to obtain sufficient political risk insurance coverage in the wake of the Arab Spring.
Solution OPIC worked with private sector U.S. insurers to encourage them to provide the necessary coverage.
Impact Apache was able to return total insurance coverage to pre-Arab Spring levels so that it could continue oil and gas development.
Apache Corp. is the largest U.S. investor in Egypt and the largest producer of natural gas in the Western Desert, an area vital to the continued growth of the Egyptian economy. Since 2004, OPIC has maintained long-term commitments to provide $300 million of political risk insurance to Apache, covering its investments in Egypt. OPIC has also established reinsurance agreements with both U.S. private market and multilateral insurers, which have materially contributed to Apache’s arrangement of more than $1 billion of political risk coverage. The coverage was critical to Apache’s ongoing investment in Egypt.
Some of Apache’s coverage expired in late 2011 and was not renewed, partly because of concerns stemming from the Arab Spring uprisings. In response, OPIC together with Alliant, a U.S. broker of political risk insurance, worked proactively with U.S. private market insurers to encourage them to provide the necessary coverage. OPIC also approached MIGA, the World Bank’s Multilateral Investment Guarantee Agency, to arrange $150 million of reinsurance for Apache’s investment.
OPIC’s long-term commitments, together with both the extension of existing insurance and new insurance have enabled Apache to arrange even longer-term commitments and return total coverage of the project to the pre-Arab Spring levels of more than $1 billion. OPIC’s efforts in helping attract private sector insurers helped ensure that Apache’s oil and gas development in Egypt could continue at its current pace.
This project was profiled in 2013