All lies in the infrastructure Part V

Although the Egyptian Ministry of Petroleum has suspended new gas contracts since June 2008, waiting for a stabilized world price, Egypt has been engaged in many gas export deals and projects, which necessitate a continuous development of the country’s gas infrastructure

Egypt’s gas export infrastructure includes mainly two cross-border gas transmission pipelines, which are Arab Gas Pipeline and Marine Pipeline. The first, linking Egypt to the East Mediterranean region, was initially an agreement signed between Egypt, Syria and Lebanon in December 2000, joined later on by Jordan in January 2001 and then Iraq in September 2004.

It is worth mentioning that Jordan and Egypt signed in June 2001 a gas sales agreement for the supply of the Egyptian gas to Jordan. This agreement has been effective since July 2003, when Egypt started first as exportation to Jordan after the completion of the first phase of this gas pipeline project.

The Arab Gas Pipeline consisted of three main phases; Phase 1 from Arish (Egypt) to Aqaba (Jordan)/36”-264 km completed in July 2003, Phase 2 from Aqaba to Rehab (Jordan)/36”-394 km completed in February 2006 and Phase 3 from Rehab to Syria/36”-30 km completed in February 2008. The capacity of this project is approximately 10 billion cubic meters per annum (bcm pa).

Egypt’s total gas exports to Jordan counted for 2.5 billion cubic meters in 2007/2008. This number is to increase by approximately 4 billion cubic meters over the next five years.
Moreover, Egyptian gas exports to Syria are planned to reach 2 bcm per year by 2014, while exports to Lebanon will count for 0.6 bcm.

According to plans, the Arab Gas Pipeline will be extended to Turkey through a 220-km 36” line from Homs/Aleppo in Syria to the Syrian/Turkish border.
In addition to the Arab Gas Pipeline, Egypt is engaged in the Marine Gas Pipeline, which links the country to Israel. This second cross-border gas pipeline has triggered a wide wave of opposition and criticism from the Egyptian society and has led to a considerable number of controversies and various lawsuits were filed to stop this project.

Back to August 2005, the East Mediterranean as Company (EMG) and Israel Electric Corporation signed an agreement to import an average of 2 bcm per year of Egyptian gas over the coming 15 years, starting in 2008. Gas is transported through the recently commissioned Al-Arish-Ashkelon pipeline; a 100-km submarine gas pipeline connecting the two countries. The Marine Gas Pipeline, started commercial operation in May 2008, is reported to have an average capacity of 7 bcm per year.

It is worth mentioning that EMG is n international consortium consisting of: Mediterranean Gas Pipeline Limited (Egyp/Israel/USA) 28%, PTT of Thailand 25%, Ampal-American Israel Corporation 12.5%, Zell/Fischer of the USA 12%, EGAS 10%, Merhav Group of Israel 8.1% and Merhav Ampal Energy Holdings (Israel/USA) 4.4%.

Refining comes along!
While paying great attention to the gas export infrastructure, Egypt is developing and expanding as well the oil-refining sector. There are nine refineries holding the country’s total capacity that exceeds the 700 thousand barrels per day (bpd), which are Alexandria Petroleum Processing Company (Mex), Ameriya Petroleum Refining Company (Ameriya), Assiut Petrochemical Refining Company (Assiut), Cairo Petroleum Refining Company (Mostorod), Cairo Petroleum Refining Company (Tanta), El-Nasr Petroleum Company (Suez), El-Nasr Petroleum Company (Wadi Firan), Middle East Oil Refinery (Sidi Kerir) ad Suez Petroleum Processing Company (Suez).

MIDOR is the country’s most recent oil refinery that added its 100 thousand barrels per day share of the total refining capacity. Commissioned in 2001, MIDOR was originally a joint venture between private Egyptian and Israeli companies, but the latter sold their interests to the National Bank of Egypt in 2001 and EGPC is currently the main shareholder.
The remaining eight other refining companies are entirely owned subsidiaries of the EGPC.
Currently, an ambitious expansion plan is underway to increase the capacity to over one million barrel per day. These expansions include the following:

  • Egypt Refining Company (CITADEL): is currently being developed at the Mostorod Complex and expected to be completed by the end of 2011 with an annual capacity of 4.1 million tons of refined products (of which 2 million tons will be high quality diesel). Preparatory work on the project started in September 2007 following the award of a project management contract to Worley Parsons and the award of the main engineering procurement and construction contract to a joint venture between Japan’s Mitsui and South Korea’s GS Engineering and Construction.
  • Sokhna Refinery and Petrochemicals Company: is to build a 150 thousand barrels per day refinery at El-Sokhna, which is the terminal for tankers offloading crude oil to be transported through the SUMED crude oil pipeline to Sidi-Kerir on the Mediterranean coast. This refinery is planned to produce gasoline and diesel for the road transport market in Europe and Asia. Currently, the implementation of front-end engineering and design (FEED) studies are carried by Foster Wheeler of the US and Germany’s Uhde. This company is a consortium of EGPC, Kuwait investors and other international bankers.
  • MIDOR El-Suez Company: plans to develop a refinery in El-Sokhna Free Zone with a capacity of a 140 thousand barrels per day to supply the domestic market with diesel and fuel oil.
  • Essar Company: this Indian company is still in the preliminary stages of developing a 300 thousand-barrels per day capacity refinery, located in the north of Egypt.
  • Saudi Alpha Project: will include petrochemicals complex and a 400 thousand-barrels per day refinery.

The above-mentioned projects are expected to increase Egypt’s refining capacity from the current 700 thousand barrels to more than one million barrels.

To be continued…

By Yomna Bassiouni


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