Exploring the brighter side

Looking back at a year filled with ups and downs, one cannot disclaim the role that the Ministry of Petroleum played to expand Egypt’s relations with other countries… and yet more to come

“It is always good for any country to assemble relations with any other country that has the latest technologies,” said Ibrahim Zahran, member of the National Specialized Councils and former chairman of Khalda Petroleum Company.

Citing the latest Egyptian-Iranian relationship as an example, Zahran commented, “It was good news that Iran has exported its petrochemicals to Egypt, but it was more logical to make an agreement with Saudi Arabia to import petrochemicals. Saudi Arabia is considered the crown on the list of countries producing petrochemicals.”

“Egypt should have used petrochemicals as the road opener for more investments with Saudi Arabia. Their market should be in Egypt’s working agenda in the next year,” Zahran elaborated.

Recent news showed that Jordan is in talks with Egypt to apply some amends to the agreements signed between the two countries. “Jordan wants more gas from Egypt, but with the same agreed prices from before,” said Amr Kamal Hamouda, Head of the Fustat Centre for Studies and an oil expert. “Our relation with Jordan goes way back, both countries always supported each other politically among the Arab community. Jordan accommodates lots of the Egyptian labor in different areas.”

“Jordan is also our window to other Arab countries. The Arab Gas Pipeline is connected to Jordan’s domestic gas network; they tried working with Egypt in the gas field and receiving gas through the Arab Gas Pipeline was always the safest and the effortless way for Jordan. So it is expected that they would want more,” said Hamouda.

Hamouda added that in light of the Jordanian support to Egypt among the Arab community is enough to make Egypt adjust the contract deals, but only to the Jordanian to gain more benefits.

Zahran believes that Jordan can be the mean to unite Egypt with Iraq, “Egypt can use this relation with Jordan to reach Iraq. A connection from the Arab Gas Pipeline can be made between Al-Basrah and Jordan.”

Egypt should be smart in using the gas as a political card to deal with other countries, “Many countries now use their sources to bring more income to their markets, Egypt has a lot of assets that they need to use in the right way,” added Hamouda.

That brings the subject to a major hinder in the petroleum sector, which is the low experienced negotiators that deals with the contract discussions, “How can you still use the same negotiators that failed before to bring the best in contracts for Egypt,” Hamouda wondered.

“Egypt should use negotiators from the Ministry of Foreign Affaires, not only from the Petroleum Ministry. They can also hire experts from the Committee of Energy, as long as they can bring more benefits from each contract that Egypt signs,” added Hamouda.

During 2010, China announced that they are entering the Egyptian market through the building of a $2 billion refinery. “Bounding with China will bring ample of investments to Egypt. The joined refinery project is good only if it’s built with the latest technologies,” said Hamouda.

“The refinery agreed on is from the 3rd generation, and now refineries are built on the 5th generation technology. This would be considered as low investment for Egypt, refineries should match the latest technologies in the world, if Egypt wants to use it for brining more foreign investment to the local market,” Hamouda explained.

Moreover, Zahran added to the China matter as it is the new tycoon of the coming period, “They have the power, the will, and the technology to master the economical world in the coming stage. If China wants to be in petroleum business with Egypt, then it will be a guaranteed investment.”

Zahran also agrees on more relations with South Africa, “They have fine modern technology, and they are an African country that it will affect Egypt’s position in the African continent.” He further added, “South Africa is in talks with Egypt for more corporative investments in the petroleum field. Egypt can be in business with them in Oil Products. The Energy Diplomacy card is a well known method in the world now, most countries use it to bring the most promotes into their markets.”

He also brought Libya to the subject; “There should be a pipeline from Libya to Alexandria. Egypt is lacking gas in the current period and it would have helped if Libya gave us gas and we gave them oil.”

On the same matter, Hamouda said that Egypt has witnessed lots of Libyan gas stations lately; also they are in talks to build a refinery in Suez. “This refinery would help in Egypt importing gas in return of that service.”

Additionally, Hamouda highlighted that refineries are considered as an assured tool that Egypt can use to bring more investment into the country. “Cyprus does not have refineries so we can offer any of our eight communal refineries in exchange of a share in the oil refined; our refineries need these to meet their capacity needs.”

Both experts corroborate the importance of strengthening the Egyptian ties with the African continent. “Sudan should be a main target for Egypt in the coming period through offering service and exploration companies. Angola and Congo are prosperous with opportunities for Egypt as there are still areas not conquered yet,” said Hamouda.

“Sudan and Somalia must be in Egypt’s petroleum agenda. Egypt has close ties with Sudan and it can use this in oil and gas investments. Egypt can work in there and can also bring international companies to explore with it in their lands,” added Zahran.

In Europe, Hamouda finds that having a good relation with Spain will bring Egypt close to the countries of the European Union. “Egypt is exporting products but at low prices to Spain, in exchange of finding a safe way into the European Union. It is good to have a useful backup to give you a good reference if you are going to ask the International Monetary Fund for loans.”

Furthermore, truss relations with Russia are considered among Egypt’s targets for the next year, “Russia is way cheaper than other countries in exporting oil products. Egypt can build a liquefy station in Rashid and it would receive boats from Russia,” said Hamouda.

Hamouda added to next year’s targets, that Egypt would extend the Sumed pipeline and not only uses it as a passageway, but to use it also as oil storage on the land of Egypt. “We can store this oil in our lands and use the trade it for others concept. We can also make Algeria trade gas through our lands and we take either share or fees on selling that gas.”

“Egypt ought to always look through its infrastructure and make the most of it,” continued Hamouda.
On the other hand, Zahran finds that Egypt is an entryway to whatever happens on its land. “The oil spill in the Red Sea, the fire in the Alexandria Petroleum Company, and last year’s fire that Egypt’s Middor Oil Refinery lost its capacity because of it, all these incidents could work as a bad reputation on maintenance and safety in Egypt.”

Reaching the end of the year can always be a path to a brighter side, that oil and gas sector can pass to if some changes are done in the mentality that makes decisions for the sector. Coping with the modern methods and techniques to sail through and join the peak of oil community, and mostly clarity with the investors has always been the easiest way to attract them to the local market.

By Sama Ezz Eldin


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