Linear momentum and persistent motivation to reach energy self-sufficiency and become a regional energy hub has made 2018 a prosperous year for gas and oil production in Egypt. Having reached self-sufficiency in natural gas production during 2018, as a result of a six-fold increase in Egypt’s Eastern Mediterranean Zohr Field’s production, Egypt’s gas production is at an unprecedented level.
Egypt’s gas consumption reached its highest level in fiscal year 2016/17 with 41.5 million tons equivalent per year. Similarly, officials have revealed that, with a $1.8 billion investment from British Petroleum (BP), the country’s gas output is expected to reach peak production in 2019.
In a mere few years and with a gas consumption that reached its highest of 41.5 million tons equivalent per year during fiscal year 2016/2017, according to the Ministry of Planning, Monitoring and Administrative Reform, Egypt is expected to put an answer to an article penned by Gal Luft from the Institute for the Analysis of Global Security in 2012, titled, “Energy Self-sufficiency: A Realistic Goal or a Pipe Dream?” It is a realistic goal; at least, this is the answer to Egypt’s case. Luft had once proposed that energy self-sufficiency is “neither reliable nor affordable,” however, Egyptian efforts suggest otherwise.
Gas and oil trajectory
Post-2011, Egypt’s decreasing gas production level led to a gap between supply and demand, whereby demand was significantly greater than supply. As a result, the Egyptian Natural Gas Holding Company (EGAS) and the Egyptian General Petroleum Corporation (EGPC) announced a multi-stage liberalization of the natural gas market through Gas Market Law No. 196 for 2017. This meant that private companies could now use national gas grids to import, ship, store, transfer, market and disperse natural gas to Egyptian users, and that the natural gas market would be completely liberalized by 2022. In exchange for allowing private companies to operate on state-owned grids, Egypt collected tariffs from companies. Importantly, in February 2018, the law was followed by the declaration of executive regulations designed to implement it.
This law, coupled with the six-fold growth of the Leviathan Zohr offshore gas field, and the cooperation between Egypt and Mediterranean countries and the European Union (EU) also through joint agreements and memorandums of understanding (MoU), has put Egypt on track to becoming the gas and oil regional hub, enabling it to become a trading centre point, according to the Minister of Petroleum and Mineral Resources Tarek El-Molla.
“Egypt is qualified to be a regional hub for energy due to its liquefying plants, pipeline grids, Warehousing, transportation, trading of petroleum and gas products and ports overlooking the Mediterranean and the Red Sea and refineries,” stated El-Molla during Al-Ahram’s Energy conference, explaining that the ministry is working within the bigger 2030 Agenda to ensure energy security and increasing the sector’s contribution to the gross domestic product (GDP), modernize and promote sustainable habits for the sector, and reduce the environmental footprint of the sector, according to Egypt Vision 2030.
This, as Fitch Solutions had predicted at the end of 2017, led to increased production in gas in 2018, leading Egypt to end the importing of liquefied natural gas (LNG) in September, upon receiving the last shipment, according to the Oxford Business Group. Despite Fitch Solutions being right about their prediction, they argue, “Whilst LNG cargoes will decrease over 2018 onwards as domestic gas production ramps up, we note that seasonal demand dynamics will ensure LNG imports continue at smaller volumes over the next five years.” However, their argument seems to be flawed, as they have also falsely estimated production levels for Zohr gas field during 2018, with Zohr gas field produce jumping to two billion standard cubic feet per day (scfd) in September, from January’s 350 million scfd. It is expected that 2019 will see Zohr produce 3 billion scfd.
However, Zohr is not the only gas field in Egypt; West Nile Delta (WND), Greater Nooros Area, Atoll Phase 1, and WDDM – Burullus Phase 9B are all important gas fields that add to the national gas production. Looking at the country as a whole, Egypt’s total gas production, came to 6.6 billion scfd in September, compared to 2017’s average of 5.1 billion scfd and 2016’s 4.4 billion scfd, according to the Petroleum Ministry, meaning that between 2018 and 2017, there was a 29.4% year-on-year increase.
West Nile Delta (WND) gas field, which yields the second highest amount of natural gas, according to a June 2018 report by The Oxford Institute for Energy Studies, is expected to develop to 5 trillion cubic feet with a maximum production level of about 1.5 billion cubic feet per day, according to British Petroleum (BP). Moreover, the Oxford Institute for Energy Studies states, “The Taurus and Libra fields started producing gas in May 2017 and the Giza, Fayoum and Raven fields are expected to come on-stream by the end of 2018 or beginning of 2019.” These fields are all part of the West Nile Delta WND gas field.
Turning to the remaining three gas fields, Greater Nooros Area, Atoll Phase 1 and WDDM – Burullus Phase 9B, produce one billion, 350 million and 450 million cubic feet per day, according to BP and a 2018 Interfax report.
2019: A year of prosperity
After significantly increasing the total gas output by 29.4% in 2018, it is expected the by 2020, the total gas output will jump by 100%, according to the Petroleum Minister; Egypt is also expected to resume exporting energy by the end of 2019. In a meeting with Minister of Manpower Mohamed Saafan early December 2018, General Manager of Eni’s IEOC Fabio Cavanna said, “Egypt will move from the group of countries importing natural gas to be an exporter by the end of 2019.”
To ensure that Egypt is able to reach its potential and meet local demand and then some, Cavaana and Saafan are looking to sign a cooperation protocol, in coordination with the Petroleum Ministry, to offer young professionals a high-tech training opportunity. The training will also cover safety while on site and will look to produce young professional calibres.
Commenting on the training, Cavanna said, “This training will create young cadres who can take responsibility at the highest level, as they will be trained in major international companies, such as Italy’s Eni.” Meanwhile, Saafan explained, “This comes within the framework of the Ministry of Manpower’s current [efforts] to [hold] training programs involving the latest scientific methods with major international companies, specifically in the field of petroleum services.”
In addition, this year looks to be the year when Egypt looks outwards towards neighbouring countries that could be energy allies. Egypt’s strategic geographical location makes it an optimum partner to countries from Italy to Saudi Arabia, to Sudan. During the 2018 Med Dialogues in Rome, Italy, El-Molla explained that Egypt is looking to approach Italy, or “Europe’s energy gateway,” as he called it, to increase its work with the EU.
“At the start of this year  we signed a memorandum of understanding on energy with the European Union that will make Egypt a considerable energy supplier in alternative to existing suppliers,” stated El-Molla, continuing, “With the untapped potential natural gas we have in the Mediterranean”, nearby countries “need to use Egyptian infrastructure,” adding that they wish to cooperate on energy. Egypt is also looking to cooperate more with Saudi Arabia and Sudan.
Furthermore, Egypt is looking to increase its gas exports to Jordon to 100 mcf/d early on in 2019, according to the Jordanian Minister of Energy Hala Zawati, who said, “Egypt has been exporting amounts of gas to Jordon since September and it will raise the amount to 100 million cubic feet per day by January.” Supporting this, El-Molla stated in March 2018 that Egypt will resume exporting gas to Jordan as of early 2019 after four years.
On the foreign front, Egypt is also looking to attract $10 billion worth of new investments during the fiscal year 2018-2019, stated the Petroleum Minister in a statement in November 2018, adding that increasing investments is essential to ensure the continuity of the oil and gas sector’s growth and development. Investments, according to the minister, will be aimed at increasing production and exploration efforts. Given the positive investment climate that looms over Egypt, the minister expects that it is very possible to draw this amount in a short amount of time.
Having once been citizens of an exporter of gas and oil, it came to a blow to Egyptians when their homeland started importing them; however, the recent surge in production has left many happy and looking forward towards a brighter future. Overall, it seems like 2019 will be a prosperous year for the industry.