Egypt is a hub for energy trading and investments, with potential and opportunities in different energy sectors. The Egyptian government is cognizant of the need for a sustainable energy mix to both address increasing demand and to move to a more environmentally-sustainable and diverse electricity sector. Not only in terms of its rich oil and gas resources, but the country also has an abundance of land, sunny weather, and high wind speeds, making it a prime location for renewable energy projects. Egypt is further working on developing several hydrogen projects to secure a sustainable energy mix.
Oil and Gas Sector
Egypt is a significant player in the oil and gas industry. In 2022, the total production of petroleum wealth during 2022 reached around 79.5 million tons, which is divided into about 27.8 million tons of crude oil and condensate, around 50.6 million tons of natural gas, and 1.1 million tons of butane, in addition to butane produced from refining and manufacturing refineries, the Ministry of Petroleum and Mineral Resources (MoPMR) said in a statement about 2022 achievements and milestones.
The MoPMR has taken it upon itself to modernize the methods of attracting foreign investments to search for oil and gas in Egypt and follow the best international practices. This contributed to attracting more investments to Egypt.
In July, Minister of Petroleum and Mineral Resources, Tarek El Molla announced an annual plan, with investments worth $8 billion targeted to the oil and gas sector during the fiscal year. These investments are planned for research, exploration, development, and operating expenses.
An ambitious plan has been set for drilling work to explore natural gas in Egypt, most of which will be offshore, mainly in the Nile Delta, East Mediterranean, and the economic zones in the western Mediterranean, with investments reaching $1.8 billion over two years, for 35 large exploration wells.
Moreover, Egypt has been attracting investments into the refining and petrochemicals sector. In July 2023, the Ministry announced that it is implementing and accelerating new refining projects with around $7.5 billion in investments. When it comes to petrochemicals, the sector is accelerating the implementation of new projects with investments of about $1.4 billion.
To encourage petroleum exports, the Egyptian Finance Minister, Mohamed Maait, issued a decree in August to amend some provisions in the executive regulations of the Customs Law. Accordingly, the amendments are set to exempt petroleum companies from fines and boost exports.
Meanwhile, Egypt is working on becoming a natural gas trade hub as Egypt has become one of the main countries providing the European Union (EU) with liquified natural gas (LNG).
Egypt’s renewable energy sector
In May 2022, Egypt released its 2050 National Climate Change Strategy, which does not include an overall emissions reduction goal. In its second Nationally Determined Contribution (NDC) update, Egypt pledged to have 42% of its power produced from renewable energy in its energy mix by 2030. In 2021, renewable energy generation in Egypt amounted to only 12% of total generated power, according to the Climate Action Tracker website.
This comes as the total installed capacity of renewable energies (solar and wind) will reach about 7,000 megawatts, representing about 18.5% of the expected maximum load (38 gigawatts) by the end of 2025, Minister of Electricity and Renewable Energy, Mohamed Shaker, announced in September 2023.
Shaker referred to the efforts to communicate with specialized companies to implement wind energy projects with large capabilities, explaining that the areas of West Aswan, West Sohag and Sidi Barrani have been allocated to establish renewable energy projects, and parts of them have already been made available to companies that will implement wind energy projects. The Minister explained that 4 memoranda of understanding (MoUs) were signed with investors in the field of renewable energy projects with a capacity of 28 gigawatts, for the purpose of getting the sites to conduct the measurements and studies required to implement projects with a total investment estimated at $35 billion.
Moreover, on September 20th, the Cabinet approved the offer submitted by AMEA Power Company, one of the companies of the Emirati AlNowais Investments Group, to implement additional projects in the field of renewable energy. The projects include adding a capacity of 1,000 megawatts to the solar energy project in Aswan, and implementing a wind energy project with a capacity of 500 megawatts in Ras Gharib.
Hydrogen Sector
Egypt is keen to develop green hydrogen and supports its projects. In this regard, Prime Minister Mostafa Madbouly chaired the first meeting of the National Green Hydrogen Council to present the executive status of green hydrogen projects in September 2023.
The country is expected to attract foreign investments in the green hydrogen industry. Total foreign direct investments (FDIs) are forecasted to record $81.6 billion by 2035, according to Al Ahram Weekly.
Accordingly, the General Authority of the Suez Canal Economic Zone (SCZONE) is adopting a strategy that is based on the localization of the green hydrogen industry on three main axes, which are manufacturing green fuel from green hydrogen, green ammonia, and methanol; providing complementary industries to this type of fuel such as electrolyzers, solar panels, turbines, and water desalination stations; in addition to providing ships with green fuel services through their ports.
Egypt aims to be a competitive exporter of green hydrogen. The geographical proximity between Egypt and Europe is very important, especially with the expectations of an increase in the European continent’s dependence on clean energy and green hydrogen in the near future, Prime Minister Mostafa Madbouly said in August, stressing in this context that Egypt has the necessary infrastructure to produce green hydrogen and then export it to Europe.
Egypt has succeeded in signing over 20 MoUs with major companies developing green hydrogen, 10 of these partnerships have been developed to the level of framework agreements to implement investments worth about $83 billion, to produce 15 million tons annually of green ammonia and manufactured green methane.
With green hydrogen, renewables, and hydrocarbon Egypt has a promising mix of energy, attractive for investors. The country’s energy mix is moving towards a greener future, which ensures the commitment to climate action, and supports the partners’ decarbonization goals.
