The Cabinet, chaired by Prime Minister Mostafa Madbouly, approved Wednesday the use of the R-Factor (Profitability Factor) in certain petroleum agreements based on specific standards and conditions for each region.

The R-Factor is a formula used in petroleum agreements to determine how profits are split between a government and an oil or gas company. It attracts companies by enabling them to recover their costs more efficiently during the early stages of exploration and production. Over time, as revenues increase, profit-sharing shifts to ensure the government receives a larger portion.

This new system is expected to attract more companies to operate in untapped areas of the Mediterranean and beyond. It will also serve as an incentive for companies to engage in exploration activities more effectively, ensuring mutual benefits for all parties involved, according to the Cabinet’s statement.

The R-Factor system will also support the domestic gas market by encouraging more companies to undertake exploration and extraction operations in border sectors that have never undergone exploration and lack geological or geophysical data.

In the same context, the Cabinet approved amendments to the concession agreements of the Masry and Cairo blocks in the Mediterranean between the Egyptian Natural Gas Holding Company (EGAS) and US ExxonMobil, allowing the application of the R-Factor.