Establishing high hopes for Egypt’s domestic energy sector, Oil Minister Sherif Ismail announced that the country intended to be free of LNG imports by no later than 2020 with the help of local field development.
The announcement comes as Egypt continues to grapple with a daunting energy landscape that has been especially challenging since the collapse of the long-standing government of Hosni Mubarak in 2011. Since then, the one-time natural gas exporter has struggled to meet growing domestic demand at a time when foreign investment was growing more cautious. Coupled with security issues in the eastern Sinai region, the energy challenges erased Egypt’s role as natural gas exporter and left Cairo searching for new, sustainable options.
The country’s reliance on costly imports has remained a challenge in recent years, resulting in a daunting debt to foreign producers that has proven difficult to chip away at.
However, Ismail’s announcement appears to demonstrate a government that feels it has turned a corner in terms of domestic production. According to a Reuters report, the minister said that recent efforts to partner with firms like Vitol, Noble and BP begun to take shape, bolstering existing production efforts in the Nile region of the country.
“Egypt’s gas production is 4.7 billion cu ft a day and we need no less than 700 million cu ft extra per day to meet the country’s electricity needs during the summer, in addition to the gas needs of the industrial sector,” Ismail said, according to the Reuters report.
Late last year, local media reported that Egyptian gas exports had seen a 73.4 percent decline from July of 2014, citing the Information and Decision Support Centre (IDSC). That dramatic reduction meant about $70 million less in energy sector revenue compared to the same period in 2013. Not relegated to natural gas, the decline also hit crude oil exports, reducing it to $350.7 million for the summer month from $398.8 million the year before.
In an effort to reverse course, Cairo has announced a series of efforts to entice needed foreign interest in new energy development, including unconventional shale efforts alongside Apache and Shell Egypt. According to the Reuters report, the government will also be announcing tenders for exploration in offshore sites and in the country’s western desert. Egypt has also recently benefited from new investment interest from Kuwait to the tune of $6.8 billion in energy sector projects.
Taken with the recently reported 7.9% increase in foreign direct investment in Egypt, the country’s burgeoning domestic energy sector suggests that some near-term relief could be in view.
Source: Forbes
