1. Introduction
Energy is a prime source of livelihood for many nations and is a cause of affluence for others. In Egypt, energy constitutes one fifth of the country’s overall economic activity, a little less than half of the country’s export revenues, and is a strategic resource for future growth. Yet, on the other hand, Egypt’s energy reserves are quickly depletable, with a risk of over-consumption, production is aging as far as oil is concerned, and at the same time energy reserves are rather new with respect to natural gas. Hence, there are future tradeoffs between oil and natural gas in the Egyptian economy. Specifically, oil and gas should be considered as demand substitutes in addition to possessing future complementary roles in energy supply.

2. Egypt’s Energy Sector: Sustainability Analysis and Forecast
Hartwick’s energy sustainability model (Hartwick 1977, Hanley, Shogren and White 1997 and Cairns and Yang 2000) provides an optimal allocation solution to energy resources based on sustainable development constraints. Hartwick’s model (usually referred to in the literature as “Hartwick’s Rule”) is a dynamic model relating efficient extraction rates to total energy reserves and the forecasted rate of sustainable consumption. Hartwick’s Rule, as an application to the model, implies that efficient utilization of energy resources will deliver optimum resources extraction rates, such that current welfare is maximized without compromising the ability of future generations to maximize their own welfare. Consumer welfare, in Hartwick’s model, depends entirely on consumption. Production rates are derived from the path of sustainable consumption.
Based on Hartwick’s methodology, different economic sensitivity analyses have been conducted on oil and natural gas in this research. Those are based on the assumptions of historical population growth rates, future growth in domestic demand (demand-driven market analysis), and estimated elasticity over time. Dynamic optimization analysis is conducted to reach the rate of resource depletion based on annual resource extraction rates (annual efficient production levels).

3. Egypt’s Energy Sector: Future Outlook and Recommendations



Natural Gas

Consumption Growth

1.8 percent average annual growth rate until 2025.

9.45 percent average annual growth rate until 2025.


Oil production is expected to decline to 400,000 bpd by 2025, with annual production decline of 3.45 percent.

Production should reach 10 bcf/d in 2010 and 25 bcf/d in 2020.


An oil shortage is expected by 2007/2008.

Exports are a key opportunity. Gas exports should target       5 bcf/d by 2010 and 10bcf/d by 2017.


Required imports of oil at 100,000 bpd in 2008, 300,000 bpd in 2015, and 600,000 bpd in 2025.

No required imports of natural gas are expected until 2025.


Phased relaxation of oil subsidies are expected. Persistence of consumption characterized as a necessary good.

Longer term gas subsidy changes are expected. Consumption will remain characterized as a normal good.


Egypt’s Oil Future: Sustainability Analysis and Forecast

Egypt’s Oil Future: Sustainability Analysis and Forecast

Egypt’s Future of Natural Gas: Sustainability Analysis and Forecast