Egypt’s newly-appointed Petroleum Minister Eng. Sherif Haddara has headed on Sunday, May 26th, to Qatar, where he is expected to resume the negotiations between Qatar and Egypt over importing the Qatari natural gas. Egypt was expecting to import the Qatari gas by the beginning of this May, but the talks between the two countries were halted.
The pending agreement for Egypt to import natural gas from Qatar Gas has been postponed until further notice earlier this month. The postponement came as a result of a number of unresolved legal details as the Egyptian government demanded a 9-month grace period in order to pay for the Qatari gas shipments. However the gulf state declined.
The agreement aimed to import gas through Egypt’s government holding company EGAS.
The gulf state has already granted Egypt US$5 billion, including a US$1 billion grant and US$4 billion worth of deposits at the Central Bank of Egypt since President Mohamed Morsi was elected in June, 2012.
Roughly 56% of local natural gas consumption in Egypt goes to the electricity sector, which increases significantly in the summer season as gas is diverted from other sectors to meet rising demand for electricity.
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For the past several years Egypt has been trying to boost its natural gas production. Despite having significant natural gas reserves and promising new discoveries Egypt has not been fast or efficient enough to keep up with growing domestic demand.
A year ago, the Egyptian Natural Gas Holding Company (EGAS) was optimistic about Egypt’s gas production and future prospects, citing new exploration projects in the Mediterranean and announcing its first bid round since 2008. “There is normal decline in the reservoir as a result of pressure depletion,” said Mostafa El Bahr, then Vice Chairman for Agreements and Exploration at EGAS. “It’s a normal decline, but we are adding more production from new fields to maintain production levels.” It turned out this was too little, too late.
By the end of last year, Egypt announced plans to import natural gas to meet growing domestic needs as well as external export obligations. Last November, Oil Minister Osama Kamal said that the country would start importing natural gas by May 2013.
On December 17, 2012 the Petroleum Ministry made it official and announced that Egypt became a gas-importing country.
