Banby: suspension of gas exportation is not a media show

His long decades of experience in the petroleum sector have been like a fortune of information for us. Dr. Hamdy El-Banby, former Minister of Petroleum supports latest decision concerning Egyptian gas exportation and shares his views concerning lifting of subsidies, economic recovery and much more…

Do you expect an economic recovery in Egypt soon, though many analysts expect the crisis to worsen?
As a matter of fact, I believe that the Egyptian citizen did not really feel the negative side of the global economic crunch, especially that prices did not decrease like in other countries. The Egyptian government has taken some precautions to minimize the effects of this crisis internally. Also, it was expected a considerable decrease in the country’s imports bill, which did not happen.
The most apparent effect has been reflected in the volume of investments of the petroleum sector, which has led to imbalances in the sector’s financial budgets. The gap resulting from the unprecedented decreases of oil prices worldwide has been a heavy burden on the petroleum sector and caused delays in fulfilling the payments due to foreign partners, which erupted in turmoil recently.

What do you think of the ministerial decision to suspend any new gas exportation deals?
This decision is a result of the increasing rate of gas demand, especially after the extension of the Upper Egypt Gas Pipeline that requires huge amounts of gas to meet the local demand in this important area and which tops the list of priorities for the government nowadays.
Personally, I prefer the local consumption of gas instead of exportation as it carries significant economic and environmental benefits to the country, taking into consideration the fact that natural gas is the indispensable factor behind the wheel of development. It is considered as an attractive source for foreign investments.
Therefore, when it comes to exportation benefits, and regardless the financial revenues, we should first satisfy the local demand to lure more investments and initiate new projects and then export the additional gas quantities abroad.

Had the opposition waves led by Egyptian citizens any influence in such a decision?
In Egypt, decision makers are not subject to the influence of mass popular opposing the exportation of natural gas, because they study the different aspects of a decision, whether economically, politically or socially, before implementing it.
The priorities of gas utilization in Egypt should be as follows:
First, gas should be directed to household usages in order to substitute the butagas, which is currently imported with high prices and large quantities.
Second, it should be used in public and private transportation since the price of gas is much lower than the fuels and less polluting the environment.
Third, electricity should be substituted with gas in all air conditioning machines as the efficiency of electricity generation is on the average of 55-60%, which causes an energy loss.

How far is Egypt committed to fulfill its shares for Nabucco Project and the Arab Gas Pipeline?
Developing and exploiting more areas in the country through gas transmission tops the country’s focus nowadays. For instance, after the extension of the Upper Egypt Gas Pipeline, Egypt is paying high attentions to develop this area, and hence, it requires generating huge amounts of gas. Such projects should get benefit from the country’s gas resources, before directing our gas production to national and international mega projects. However, participating in Nabucco and Arab Gas Pipeline helps placing Egypt on the world map as a strategic center for gas exportation. Both drives should not conflict, but rather creating a complete scheme to maximize our gas value internally and externally.

What do you think of the forum Gas Exporting and Producing Countries, lately held in Qatar?
The more cooperation and mutual interests between countries, the more powerful and influential would be these countries. Members of the forum will have the capability to set the prices appropriate to them, especially that consuming countries seize the opportunity of signing long-term gas exportation deals at low prices. I believe that such forum is of a great importance as gas prices worldwide are considerably low to oil prices, though the efficiency of gas utilization is much higher and that is the reason why we do need to have an organization to defend the rights of producing, exporting and even consuming countries.

Would this forum affect our gas exportation strategies?
Definitely! The effect will show over the future agreements, not on the currently signed ones, though we can negotiate the prices in the shadow of the swinging prices in the global market.

Petroleum subsidies will be abolished by the year of 2014. Comment
Personally, I think that cutting down the subsidies should be implemented through two means; the first through the efficient utilization of petroleum products, as I mentioned earlier using gas instead of butagas in households as this latter product is imported at very high prices with large amounts and second, based on the first step, the government will be able to minimize the subsidies’ bill allocated for butagas as instance and hence gradually increase prices. Egypt is classified as one of the highest energy consumers worldwide and I believe we can break this fact by efficiently using our energy by an average of 20-30%.

How to lure investments to the petrochemicals and refining industries?
For the refining industry, incentives should be made to encourage more investments. As for the petrochemicals, the type of incentives needed is to provide lands with the BOT system and set appropriate prices for the final products.

What are the promising E&P areas in Egypt?
The Western Desert and Gulf of Suez are the most promising E&P areas in the country. However, we should reconsider the areas where E&P operations are restricted, whether for environmental or touristic reasons, as these areas are very rich in oil and gas. Nowadays’ exploration and drilling technologies work closely to avoid any possible harms to the environment, therefore we find an area known for its touristic activities and at the same time E&P operations are taking place. It is the role of the Supreme Council of Energy in association with the scientific organizations to study the possible exploitation of these restricted areas without polluting the environment or decreasing the touristic activities.

How accurate are the announced volumes of gas reserves in your opinion?
Unfortunately, the media is imposing a tight pressure on officials to reveal the number of gas reserves every now and then, which is totally unfeasible and leads to inaccuracy. Such figures should be announced once a year, whether in January or in July with the beginning of a fiscal year. When I was the Minister, we used to announce the figures of reserves twice a year, in January and July and no one should distrust the officials’ announcements as they are the only experienced authority to calculate the country’s reserves.
According to the American Society of Petroleum Engineers, being a member, reserves are the quantity of unexploited polls of oil/gas that are not extracted yet and could be discovered later on through the latest technologies.

Are there any barriers in the petroleum sector?
I am continuously in contact with Eng. Sameh Fahmy and being a member of the Energy Committee of the National Democratic Party (NDP), we get the chance to tackle the future vision for the industry.

What is your role as a member of the NDP Energy Committee?
During the NDP’s last term conference, we discussed the necessity to activate the nuclear energy project in addition to discussing the law of nuclear security. Also, we focused on wind energy, which was announced in March 2007 by the European Union (EU) as the renewable energy that would provide 20% of world energy by the year of 2020. We got the approval to add water energy to the list of clean energy; currently 12% of clean energy is represented in the wind and solar energies, while the remaining is held by water energy.

By Tamer Abdel Aziz


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