• 2 hours Shell Oil Trading Head Steps Down After 29 Years
  • 6 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 8 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 10 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 11 hours Venezuela Officially In Default
  • 13 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 15 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 21 hours Saudi Oil Minister: Markets Will Not Rebalance By March
  • 1 day Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 1 day Rosneft Announces Completion Of World’s Longest Well
  • 1 day Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 2 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 2 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 2 days Russian Hackers Target British Energy Industry
  • 2 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 3 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 3 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 3 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 3 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 3 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 4 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 4 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 4 days GE Considers Selling Baker Hughes Assets
  • 4 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 4 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 4 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 5 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 7 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 7 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 7 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
Rory Johnston

Rory Johnston

Rory Johnston is a Master of Global Affairs student at the University of Toronto’s Munk School of Global Affairs where he focuses primarily on the…

More Info

Egypt’s Precarious Energy Position

Egypt’s Precarious Energy Position

Egypt faces a serious energy crunch in securing the required petroleum and natural gas imports to meet expected summer requirements, Egyptian Oil Minister Sherif Ismail told Reuters on Monday. While keeping the geographic company of hydrocarbon giants, Egypt is a net energy importer and currently relies on regional allies for oil and natural gas shipments. The country has been in a state of political flux since the ousting of Hosni Mubarak in 2011 and the subsequent turmoil has all but frozen the government. The resulting uncertainty in the policy process has hobbled Egyptian energy security, making it difficult for Cairo to ensure sufficient energy supplies for the summer months.

“The first estimate … is that we will need to import petroleum products of around $250 million per month during the four summer months,” Ismail said. Last year, fuel shortages caused winding lines at gas stations around the country and sparked protests. To avoid these shortages, Egypt will depend on the continued support of Saudi Arabia, Kuwait, and the United Arab Emirates, which have supplied more than $4 billion in fuel since Mohamed Morsi was ousted last summer.

Related Article: Nigeria Mulls $20 Billion Trans-Saharan Natural Gas Project

The natural gas situation is even more complicated as Egypt’s planned liquefied natural gas (LNG) terminal has yet to materialize. Originally planned to be up and running before April, the contract for its construction has experienced delays and it is now unlikely that it will be operational before it is needed most in summer 2014. If sufficient natural gas supplies are not found, Egypt may have to shift to more expensive fuel oil to meet electricity demand.

Recent moves to divert natural gas from export to domestic consumption have taken a heavy toll on international energy firms operating within Egypt. British BG Group took a $1.3 billion impairment on its Egyptian business in January, and PGNiG, a Polish state-owned gas company, decided to pull out of Egypt entirely. Without the help of international companies, it will be difficult for Egypt to further develop its hydrocarbon reserves and ensure that this is not an annual crisis.

The energy situation is also hurting domestic heavy industry, which has enjoyed subsidized energy prices in the past. The anticipated shortages this summer have encouraged the government to open the door [Arabic] for private companies to import natural gas independent of government tenders. However, these companies face considerably higher than subsidized rates. “The cheapest price for the private sector would be around $12/MMBtu as well as the fee that will be paid [to] the government for using its network and other administrative costs. This compares to $6/MMBtu currently paid by the heavy industries,” Tamer Abu Bakr, president of the Energy Committee of the Federation of Egyptian Industries, told the Wall Street Journal.

Related Article: Israel’s Oil Platforms in Jeopardy and the Samson Syndrome

Egypt is now a perfect example of how energy insecurity can wreak havoc on a country’s normal operations—Cairo’s inability to guarantee energy supplies is hurting consumers, domestic industry, and the entire Egyptian economy. The upcoming presidential and subsequent parliamentary elections may help ease the uncertainty in Cairo, but they are by no means a cure all. Egypt now faces the unenviable task of reestablishing a functioning government, reforming unsustainable energy subsidies, and rebuilding its energy supply chains. Cairo is quickly realizing that it is impossible to fuel a modern economy without, well, fuel.

By Rory Johnston




Back to homepage


Leave a comment
  • John D on February 12 2014 said:
    This is what happens when a country grows based on exporting a finite commodity. When Egypt had a surplus of oil, its population exploded and everyone rode the oil gravy train. Now the wells are drying up, oil that could be exported is now needed to support internal consumption, and they are left with a population used to living on oil money. The country will collapse at some point.
  • Elsayed Noureldin on February 20 2014 said:
    Based on your experience ,please clarify the following points :
    1. Present Natural gas price to Iron&steel; industry
    ( intensive consumption industries )
    2.What is your proposal for mitigating the present
    shortage of Natural Gas in Egypt
    3.When this shortage can be mitigated based on the
    signed agreements between Egypt and the
    international companies to dicover new gas
    resources
    4.Is it Logic to plan for new projects in Iron &
    Steel industry (intensive Consumption of NG )

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News