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          Egypt’s agriculture minister stresses importance of boosting intra-regional trade cooperation among African states

          Egypt’s agriculture minister stresses importance of boosting intra-regional trade cooperation among African states

          Azerbaijan, Iraq discuss prospects of relations

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            Turkey eyes $5bn bilateral trade with Qatar

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            Deal signed to set-up first factory in Qatar to assemble electric vehicles

            Deal signed to set-up first factory in Qatar to assemble electric vehicles

            Railway line to be built between Mosul, Turkey: governor of Nineveh

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            Iraq set to award new Faw Port deals

            Egypt implements 164 service and development projects at LE4.8 billion in North Sinai

            Egypt implements 164 service and development projects at LE4.8 billion in North Sinai

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            Miral’s premier Abu Dhabi waterfront project work on track

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              Investments in renewables in Egypt reach LE6 bn: Official

              Investments in renewables in Egypt reach LE6 bn: Official

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

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              JGC lands $3.7bn Iraq refinery upgradation project deal

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              Tadweer opens phase 2 of solar power plant at Al Dhafra

              France to help Iraq generate electricity, will invest in education, science: Macron

              France to help Iraq generate electricity, will invest in education, science: Macron

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              Acwa Power inks finance deals for 900MW Dubai solar park

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                Egyptian COVID-19 drug to be on market in two weeks: Health Ministry

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                COVID-19 vaccine could be available by autumn: Oxford University

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                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

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                Saudi to be among world’s big leisure tourism hubs by 2030

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                Qatar’s hospitality sector peaks despite turbulent 2020

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                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

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                Staycations to stimulate Qatar’s hospitality sector

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              Egypt looks to secure LNG production & supply

              Oxford Business Group

              August 23, 2014
              in Economy, Oil & Gas
              0

              With its significant reserves of natural gas, Egypt has been a key exporter for regional consumers over the past decade but with growing domestic consumption and a number of fiscal constraints, the country has been looking to secure additional supplies by expanding LNG capacity.

              In May the Egyptian government signed a letter of intent with the Norwegian shipping company Höegh LNG for the use of a floating storage regasification unit (FSRU), to be located on the port of Ain Sokhna for a period of five years. FRSUs regasify liquefied natural gas, a key step for expanding Egypt’s capacity to process imports.

              It had also lined up LNG shipments from Algeria’s Sonatrach, Russia’s Gazprom, and France’s EDF.

              By mid-July, however, the deal with Höegh had stalled, according to Reuters, prompting Egypt to reopen talks with the US-based FSRU operator Excelerate Energy. Experts say it will take about six months after a deal has been struck for the facility to come onstream, which will likely mean further gas shortages this year.
               
              LNG in the spotlight
              Hydrocarbons currently account for 91% of Egypt’s power generation, the bulk of which comes from natural gas. Egypt has sizable gas reserves, with 2trn cu meters as of end-2012, according to BP’s 2014 Statistical Review of World Energy. But a large proportion of annual production has been channeled towards the export market, which in recent years has brought in much-needed revenues.

              However, with local natural gas production down and the country unable to meet demand, Egypt has been increasingly in need of resources for domestic consumption. Currently, limited supplies for local generation have resulted in load shedding, with blackouts in some areas lasting up to several hours per day.

              As a result, gas output is being shifted away from the export market. According to BP, Egypt’s LNG exports amounted to 3.7bn cu meters in 2013, down nearly 62% from 9.7bn cu meters in 2010. Natural gas that was originally meant to feed the country’s two LNG export facilities is now being redirected to the local market.

              However, this has created additional complications, leaving facility operators unable to fulfill their LNG delivery commitments. Unión Fenosa Gas (UFG) – a partnership between Italy’s Eni and the Spanish energy company Unión Fenosa, which operates the LNG facility located in Damietta – filed an international arbitration claim against Egypt last year following the cutoff of their natural gas supply.
               
              Upstream potential
              There has, however, been encouraging news in the upstream segment that may help increase production and allow the supply of natural gas to both LNG facilities and the local market. Both UFG and UK-listed BG Group have been in talks with companies operating out of the recently discovered Israeli Tamar and Leviathan offshore gas fields.

              UFG signed a nonbinding letter of intent in May with US-based Noble Energy, the operator of the Tamar gas field, to feed its Damietta LNG facility. In June, BG signed a similar agreement with the partners operating the Leviathan field. Both these agreements will need approval from the Egyptian government, which according to local press reports, has said it will consider under certain conditions – namely that a portion of gas be directed towards the local market and that UFG drop their arbitration claim.
               
              Reducing the subsidy bill
              The need to address local energy demand does create additional challenges for the state’s balance sheet. LNG exports have helped to strengthen the current accounts and boost export revenues, but these have fallen as output is redirected towards domestic consumption.

              Although domestic energy subsidies have been rolled back in recent years, they continue to represent a significant burden on the state’s balance sheets, which means the combination of dropping exports and rising consumption finds the state facing reduced revenues and higher subsidy expenditures.

              Indeed, fuel subsidies have skyrocketed from roughly LE53bn ($9.6bn) in fiscal year 2008/09 to LE130bn ($18.14bn) budgeted in the most recent fiscal period. In an effort to reign in subsidies, the government overhauled energy prices across the board in July. This included price increases of as much as 75% for industrial consumers and an up to 175% increase on natural gas car fuel. Reductions in the subsidy bill in fiscal year 2014/15 are expected to save the government LE40bn ($5.58bn), according to a statement made by Finance Minister Hany Kadry Dimian in late June.
              Oxford Business Group
              22 August

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