On numerous occasions over the past few months, events in Egypt, Libya, and Syria have brought North Africa and the Eastern Mediterranean (otherwise known as the “Middle East”) into focus as the reason for, among other things, higher oil prices.
Of course, it would not be the first time this has been the case. The region, whose various peoples are struggling like never before to cast off the yoke of decades of authoritarianism, has often been a catalyst for higher oil prices. The recent turn of events in Egypt, however, where the military has recently overthrown the democratically elected government, imposed martial law, and engaged in the wholesale killing of political opponents in the streets, has predictably taken a toll on the country’s economy. Furthermore, questions about the country’s ability to control the Suez Canal, a key shipping route through which nearly ten percent of the world’s energy supplies make their way around the globe, have spooked investors and contributed to higher oil prices.
But while the current state of affairs has in general been a disaster from the standpoint of much-needed foreign investment, one company apparently still sees great opportunities in Egypt. After purchasing Royal Dutch Shell’s (RDS.A) Egyptian fuel retail network in May of this year, French oil multinational Total SA ($TOT) announced on Tuesday that it was buying out Chevron’s ($XOM) retail and aviation businesses in the beleaguered North African nation.
Egypt’s government has struggled financially since massive street protests demolished the brutal 30-year rule of Husni Mubarak in early 2011. The recent military action has forced the Obama administration to make at least token gestures about discontinuing $1 billion + in yearly aid to the country’s military, and according to Bloomberg, the government is falling well short of making good on the $5.4 billion it owes to oil multinationals.
The deal puts Total Egypt on track to rake in over 3 million metric tons in sales through control of some 14 percent of the country’s service stations.
Shares for Total were down two-thirds of a percent ahead of the closing bell to $55.50. The company has watched its stock advance over 10 percent throughout 2013.
[Image: Massive protest in Cairo's Tahrir Square, February 2011. Courtesy of Wikimedia Commons]