Fuel Indepency in Egypt​

Egypt’s strategy to reach self sufficiency

Egypt has been working on its strategy to reach self sufficiency for a while and had taken several steps to do so. One of which has been increasing oil exploration and production activities. Exploration efforts in the Western Desert began mid 2020 by two oil companies affiliated with the Egyptian Ministry of Petroleum with and investment plan of more than $1 billion. These efforts were rewarded when in October of 2021, Egypt’s ministry of petroleum announced that Eni, an Italian multinational oil and gas company discovered three new oil and gas discoveries in Meleiha and southwest of Meleiha, in Egypt’s Western Desert. Three wells, the Yasmin W-1X, the MWD-21 and the SWM-4X were drilled in Meleiha and southwest of Meleiha. The total production of all three wells add about 6000 barrels of oil equivalent per day and resulted in reserves that are about 50 million barrels of oil equivalent from petroleum resources.

Increase in Foreign Investment in the petroleum sector

In addition to further developing the refining industry they have worked on diversifying energy sources and reducing fuel consumption. These efforts have increased foreign investment in the petroleum sector in Egypt in FY2019/20 to $7.8 billion which is an increase of 5.4% in comparison to FY2014/15. Moreover, local investments in the sector increased by 90.9% reaching $12.6 billion compared to $6.6 billion in FY2014/15.

Based on Egypt’s cabinet report, oil and gas exports reached $3.9 billion in FY2019/20 in comparison to the $2 billion in FY2014/15. Furthermore, Egypt’s imports decreased by 53.3% between FY2019/20 and FY2014/15. On the other hand, the natural gas local consumption increased by 27.7% to 60 billion cubic meters in FY2019/20 compared to 47 billion cubic meters in FY2014/15. All these indicators have shown that the oil refining sector has significantly contributed to pushing forward Egypt’s economic growth.

Egypt to export LNG to Europe

In other news, Egypt is set to reopen a Liquified Natural Gas (LNG) plant in hopes to become a major European supplier. With the difficulties in LNG exports, Egypt is planning on changing its sales strategy by negotiating long-term deals in order to decrease its reliance on the spot market. Currently, Egypt sells around 60% of its LNG through long term contracts and the remaining 40% on a spot basis. In February of this year, Egypt announced launching bids in an effort to increase excavation operations for oil and gas in the Western Desert, Mediterranean Sea and the Red Sea.

Egypt is aiming to use the opportunity of the changing direction away from dirty fossil fuels such as coal and oil to become a hub for shipping gas to Europe. However, this strategy has become a priority as the global shortage of gas has spiked prices in Europe and Asia.

Speaking of Asia, Egypt has already started exporting LNG to Asian markets such as India and China after the Idku and Damietta stations were restarted in February. After the Covid-19 outbreak, Egypt is seeking to increase LNG exports from these previously mentioned stations in order to reach 12.5 million tons annually.

Egypt to become a key supplier of LNG and fuel

All in all, Egypt is really focused on becoming a key supplier both in LNG and fuel within the coming years and establishing itself as an indispensable source for oil and gas. We believe that these changes that have been made in the sector has affected and will continue to affect more positive change on many companies as they continue to open more opportunities for growth and exports.

Be sure to also check these articles for other industry insights:
https://tamoilfield.org/an-outlook-of-egypts-oil-and-gas-industry-in-2021

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