Egypt’s energy future is ‘bright,’ says head of parliamentary committee
Cairo pays $600 million to buy petroleum from local wells operated by foreign companies with concessions in Egypt.
Optimistic outlook. Talaat el-Sewedi, head of the Energy and Environment Committee in the Egyptian parliament. (Provided by Hassan Abdel Zaher)
2017/07/16 Issue: 115 Page: 18
The Arab Weekly
Hassan Abdel Zaher
Cairo - Egypt’s energy sector is on the rise, said Talaat el- Sewedi, the head of the Energy and Environment Committee in the Egyptian parliament.
“Look at what is happening on the ground,” Sewedi said. “Major finds are made and these will alter the future, not only of the energy sector but of this country as a whole,” he said in an interview.
Egypt’s Energy Committee expressed confidence in the energy sector and, given huge natural gas discoveries made off the coast of Egypt and in the Nile Delta, that is certainly understandable.
Egypt suspended natural gas exports following the 2011 revolution, with the country facing a major energy crisis resulting in regular blackouts and brownouts. Egypt produces 5.2 billion cubic feet of natural gas every day but this covers just 70% of its energy needs, resulting in $220 million in gas imports every month.
Egypt also produces less than 60% of its needed oil, necessitating $800 million in oil imports each month. Cairo also pays $600 million to buy petroleum from local wells operated by foreign companies with concessions in Egypt.
This pressures the national budget, which is heavily reliant on international aid and borrowing, and is something authorities have pledged to address.
A radical change seems to be in the offing. In August 2015, Italian energy company Eni discovered a massive natural gas field off Egypt’s Mediterranean coast. The Zohr field is estimated to hold 30 trillion cubic feet of gas — equal to all of Egypt’s other gas reserves.
“The field is a real game changer because it will make Egypt self-sufficient and send Egyptian gas to international markets again,” Sewedi said. “This will have far-reaching consequences for economic and financial conditions in Egypt.”
Production from the field is expected to come online by the end of the year. Production is estimated to be in full swing by the end of 2018 when the Zohr field is expected to produce 2.7 billion cubic feet of gas every day, almost half of Egypt’s overall daily production.
“Energy is a principal factor for the investment climate in any country, which means that Egypt’s image as an investment magnet will totally and positively change when it has enough energy [resources] for all economic activities in it,” said Ramadan Abul Ela, a professor of petroleum engineering at Alexandria University. “Self-sufficiency, investments and gas exports will create totally different economic realities and these realities will start to show in a few years.”
Zohr is only one of many production areas expected to be online in the next few months. Over the past two years, Egypt signed nearly 75 oil exploration deals with international companies, with many expecting new oil and gas field discoveries to be announced soon.
Sewedi said this means Egypt could be a regional energy hub.
“Our view is that oil produced in the region can come here, be refined or liquefied and then resupplied to other countries where there is demand,” Sewedi said. “This will bring in revenues, make the best use of Egypt’s location as a middle point between petroleum producers and consumers and utilise our sprawling petroleum facilities.”
Egypt’s Energy and Environment Committee in parliament has had dozens of meetings while working on a plan to reform the country’s energy sector. The committee is developing a bill to regulate gas exploration in the country to attract investors.
Prior to 2010, Egypt spent billions of dollars to build massive gas liquefaction plants in the northern coastal city of Damietta and in the northern Nile Delta. It is now constructing huge oil refineries to receive crude oil produced in the Gulf, refine it and export it on behalf of producers.
“The fact is our country has whatever it takes to become a regional energy hub,” said Medhat Youssef, the former deputy head of the Petroleum Authority, the executive agency of the Petroleum Ministry. “It has the location, the infrastructure and the expertise.”
This infrastructure includes a pipeline that can carry oil from production centres in the Gulf to markets in Europe and Asia. Called Sumed, the pipeline, which opened in 1977, provides an alternative to the Suez Canal for moving oil from the Gulf to the Mediterranean.
This infrastructure, along with recent developments on the ground and planned reforms, means that many are optimistic that Egypt’s energy sector is on the cusp of positive change.
“True, our country suffers economically now but it is rising and will manage to change its realities in a few short years,” Sewedi said. “We have a great future ahead, which means that we can develop our country and make it great again.”