Egypt’s Place in Africa’s Natural Gas Scene

Egypt’s Place in Africa’s Natural Gas Scene

Natural gas is one of the most important energy resources for Africa. Recently, the industry has witnessed great leaps that changed the continent’s views of the product. Africa owns 7.1% of the world’s total proven reserves, of which most are found in Nigeria, Algeria, Egypt, and Libya, according to a BP statistical review published in 2018. Egypt is not only among the countries with the highest reserves and production, but also stands out as one of the top natural gas consumers in the continent.

Egypt’s Natural Gas Industry on the Rise

Egypt has a flourishing natural gas industry as it is ranked on the top of the 20 natural gas producers in the world, according to the World Energy Council. Moreover, Egypt is among the top four natural gas producers and consumers in Africa.

The country comes in the third place compared to other African countries in terms of natural gas proven reserves. Egypt had 62.8 trillion cubic feet (tcf) by the end of 2017 in proven reserves. Egypt comes after Nigeria, which owns 183.7 tcf, and after Algeria, which owns 153.1 tcf. Following Egypt, Libya takes the fourth place, as it recorded 50.5 tcf of proven reserves by the end of 2017, according to the BP review.

Egypt’s natural gas reserves are expected to increase in the coming years thanks to recent natural gas prominent discoveries, an article published by the US Energy Information Administration (EIA) recently noted. The growing reserves will further enhance production and trade.

In terms of production, Egypt has been regarded as the second top natural gas producing country in Africa, recording 1.73 billion cubic feet (bcf) in 2017, compared to Algeria producing 3.22 bcf; Nigeria, 1.667 bcf; and Libya, with around 406 million standard cubic feet (mmscf).

Natural Gas Consumption

Egypt is the top African consumer of natural gas. The country used 56 billion cubic meters (Bcm) in 2017, compared to 38.6 Bcm consumed by Algeria, 4.4 Bcm used by South Africa, and 1.1 Bcm of natural gas consumed by Morocco during the same year, according to the BP review. The country’s natural gas consumption is expected to grow to 9 billion cubic feet per day (bcf/d) by fiscal year (FY) 2020/21, Egyptian media reported in September.

Egypt continues with its industrial development plans and encourages households to use natural gas instead of butane.

Egypt’s Developments Enhancing Production

Egypt has been conducting several developments on the existing natural gas fields, and adding new fields to production in the past two years. The recent discoveries enabled Egypt to increase natural gas output by around 21.59% in 2017 from the 1.423 bcf produced in 2016.

The Ministry of Petroleum has been speeding up the development of natural gas fields and adding them to the production map, boosting output to around 6.6 bcf/d of the product in September 2018. This enabled Egypt to achieve self-sufficiency of natural gas and halt liquefied natural gas (LNG) imports. Meanwhile, Nigeria’s natural gas output averaged 7.9 bcf/d in 2018, as announced by the Nigerian National Petroleum Corporation (NNPC).

New discoveries such as Zohr, Noor, North Alexandrian, and Nooros fields will help Egypt achieve its target to boost natural gas production to 7 bcf/d by the end of 2019, according to the Ministry of Petroleum spokesman, Hamdy Abdel Aziz, who talked to the media back in December. This comes as Zohr alone is expected to see an increase in production to 3 bcf/d by the end of the year.

Natural Gas Investments

Successfully diversifying investors, natural gas fields have seen several sales of stakes during 2018. Russia’s Rosneft acquired 30% and UAE’s Mubadala bought 10% in Shorouk Concession through buying parts of Eni’s shares in the concession, of which Zohr mega field is part. Additionally, Eni sold 25% and 20% of Noor concession to BP and Mubadala, respectively. Egypt had a total of four international oil companies (IOCs) operating in Zohr, and total three foreign partners in the Noor field. This diversity of companies helps Egypt introduce different expertise and technologies in the sector.

To further attract foreign investments and enhance natural gas exploration, the Ministry of Petroleum is working on drafting a new E&P agreement model. The new model will have partners covering the E&P cost and receiving shares of the production in return. The companies will have the freedom to sell their shares of production to buyers of their own choice. The new model will not only boost exploration activities in Egypt’s natural gas fields, but it will also encourage natural gas trade movement.

Additionally, the ministry has been dedicated to settle its arrears to IOCs, which attracts companies to invest more in the country. IOCs’ arrears had recorded $6.3 billion before 2014; yet, it has been decreasing as the petroleum ministry repaid parts of it until it reached $1.2 billion in 2018. The oil and gas sector is planning to totally settle arrears by the end of 2019.

Rising Natural Gas Exports

Egypt stands out in terms of developing natural gas trade. The country has been conducting several developments on natural gas fields, enhancing production and allowing re-exporting gas.

Egypt started re-exporting gas via its Idku liquefaction plant. Shell, Petronas, and Egypt’s two main state-owned oil and gas firms managed to export 520 mmscf/d of gas through Idku as media reported early in January 2019.  Moreover, Egypt reached an agreement with Jordan in 2018 to restart exporting natural gas to the neighboring country in early 2019 via the pipeline linking the two countries.

In 2017, Egypt was the fifth exporter of LNG in Africa. The top African gas exporter was Algeria, which exported 16.6 Bcm of LNG and 36.4 Bcm of natural gas via pipelines. Nigeria exported 27.8 Bcm of LNG, while Angola exported 5 Bcm, and Equatorial Guinea exported 4.8 Bcm of LNG. Libya exported 4.4 of natural gas via pipelines.

With the measures and developments adopted by the Egyptian oil and gas sector, Egypt is continuously enhancing its position in the African market. In the natural gas market, in particular, the recent discoveries, the liberalization process, and achieving self-sufficiency represent milestones for Egypt’s transformation into a regional energy hub.

Sarah Samir 3289 Posts

Sarah has been writing in the oil and gas field for 8 years. She has a Bachelor Degree in English Literature. She has three years of experience in the banking sector.


Welcome! Login in to your account

Remember me Lost your password?

Don't have account. Register

Lost Password