With more than 15 years experience in the petroleum industry and being the former head of the energy and industry committee of the People’s Assembly for three terms, Dr. Amin Mubarak, Professor of energy and mechanical engineering at Cairo University, shares his analytical views concerning the Egyptian petroleum industry and confirms that more prosperity is yet to come

In your opinion, what is Egypt’s current energy condition, taking into consideration the importance of crude oil and gas?
As a matter of fact, the energy conditions in the country have tremendously changed over the years. There is a considerable increase of oil and natural gas reserves at a good rate, despite the high costs of oil and gas extraction, especially from deep waters. I believe that we do have enough oil and natural gas reserves for the coming 30 years.

Do you think that gas reserves will be enough?
The problem lies in the way natural gas is consumed and the volume of gas utilized. Currently, massive amount of gas is directed towards electricity generation, which would affect the amount of gas reserves and require more discoveries, which will by their turn reimburse the amount of consumed gas.
However, we should be optimistic. Studies conducted by international organizations specialized in reserves calculations, Wood Mackenzie on the top, proved that Egypt’s current reserves are close to 120 trillion cubic feet of gas, 70 trillion of which were discovered.

Would the exportation banning lead to efficient gas consumption?
I know that some people are calling for banning gas exportation, while others ask the government and the ministry of petroleum to avoid using gas in electricity exported to neighboring country and another group believes that the petrochemical industry is the best place for gas utilization since it lures an added value. Personally, I think we should weigh what is best for the country as a whole, whether through exportation or any thing else. For instance, if exporting gas to Israel is in the country’s favor, so we should increase the quantities exported if we can! However, I believe that the Israeli deal is based on political considerations rather than economic ones!

What do you think of our gas exportation strategies in general?
In the time being, and with the national plan to expand the country’s gas grid to reach more households and the petrochemicals plan, we should limit the process of gas exportation.
In the past, we favored the deals of exportation since the quantities agreed upon were derived from the foreign partner share, at a fixed price of $65.2. But, with the current move towards energy pricing modification, we should no longer subsidize the gas utilized in factories and foreign partners should sell their shares to factories at international prices as the government will not be able to bear the heavy burden of subsidizing a gas that is exported outside to international markets by producers.

How can we increase our oil and gas production?
Intensifying the exploration and production operations is definitely a prime factor towards production increase in addition to attracting more foreign companies through flexibility in agreements and creation of an environment attractive enough for investors. Such factors will help double the country’s oil and gas production. As a matter of fact, over the last 10 years, the petroleum sector has succeeded to manipulate these factors in favor of boosting the production.

Will the petrochemical industry be the country’s future?
Definitely! An ambitious plan is currently held and there is already a large market for petrochemicals in Egypt, which lead to a vigorous competition from neighboring countries, such as the Kingdom of Saudi Arabia and the Gulf area. Egypt enjoys the capability of exporting a large portion of petrochemical production, which strengthens the value of our national energy sector.

Could Egypt be a main energy hub in the Middle East region?
It is already transforming into a strategic center, thanks to its distinct geographic location in addition to the Gulf of Suez, Sumed pipeline and many ports located in Alexandria, Port Said, Sokhna and Red Sea, which contribute to this transformation. Moreover, Egypt is in a centered area between Europe, Asia and Africa, though which many petroleum products can be exported. I believe if we better develop our infrastructure, we will definitely become the most strategic center in the Middle East and we would be a step ahead of many other competitors.

How can we develop the infrastructure?
Development and maintenance works should be carried out in order to advance the country’s infrastructure and expand its capacity. Also, we should create an appealing environment for investments and strengthen our economic and industrial ties with neighboring countries, such as Iraq and Qatar.

What are the plans for Egypt’s renewable energy?
Renewable energy has become an indispensable topic in any energy agenda, not only in Egypt, but worldwide.  This type of energy does not solely protect the environment we are living in, but also decreases the amount of CO2 emissions and provides an alternative to petroleum products, which are depleting. We can never depend on the oil and gas only and should look for alternatives. Egypt enjoys various sources for renewable energies, such as wind energy in the Gulf of Suez and solar energy in the southern areas.
Back to 1981, I suggested a strategy for wind energy in Egypt; however, it did not receive the appropriate attention during that time. But now, after 20 years, there is more awareness about the importance of this energy. In Europe, there is a plan to expand the utilization of renewable energy to count for 30%-50% of the daily-consumed energy. Currently, I am working on a project study for the “Science and Technology Development Fund”, which suggests establishing a solar energy plant.

Would renewable energy create a pricing competition with petroleum products?
Absolutely! Wind energy is already competing with oil and gas products in terms of prices. Also, there is a move now to facilitate the process of generating wind energy by abolishing taxes on imported equipments as a mean to attract more investors in this sector.

Do you expect E&P companies to modify their activities to include renewable energy?
In fact, there are some E&P companies that do have renewable energy subsidiaries, such as BP.

What are the challenges facing the energy sector in Egypt?
Bureaucracy is the main challenge hindering the industry.

By Tamer Abdel Aziz

Download