Fading gas behind blackouts!

“First they claimed they would deliver gas to every households, now we still do not have gas and they took our electricity too,” said a local citizen wondering who is  responsible for this problem, the Ministry of Electricity or Ministry of Petroleum

“With 18.3 billion barrels of oil, Egypt has achieved its highest-ever proven oil reserves during the 2009-2010 fiscal year ending last June,” the state’s official Middle East News Agency (MENA) announced.

The Minister of Petroleum Eng. Sameh Fahmy announced that the current figures are the utmost in Egypt’s history, expecting that the proven reserves are to reach 20 billion barrels over the next couple of years.

Crossing the 18 billion barrels margin, despite increasing local consumption, is an impressive national milestone after the nation’s reserves stood as low as 11.8 billion barrels in fiscal year 1999-2000, according to the report issued by the Egyptian Petroleum Authority and quoted by MENA. In 2009, gas was the dominant fuel for Egypt, accounting for an estimated 50% of primary energy demand, followed by oil at 43.1%.

Conversely, “The electricity cuts affected Egyptians from the Nile Delta in the north to the ancient temple city of Luxor in the south.”
Both reports came out in the same week, and during a sacred time of the year, the holy month of Ramadan, throughout which the government should have been well prepared for it. “The electricity cuts began in early August as temperatures top 38 Celsius.”

The government alleged it was not to be blamed, accusing the people of excessive electricity use. Osama Heikal from Al-Masry Al-Youm answered that back by “The government rhetoric lacked an apology to the people who are paying high electricity bills every month. It also lacked any recognition of the ministry failure to provide a basic service to the citizens.”

“It is not the people’s fault neither the holy month. The information we know that some of the companies were late with their development plan and it affected the amount of gas produced,” a chairman to one of the major companies, who asked to be anonymous, told Egypt Oil & Gas newspaper.

“Whether it is for economical or security reasons, those companies were late with their plans and it is the people whom will suffer in return.”
“The petroleum sector stressed on providing the needed amount of gas to meet the local demand ahead of anything else, but falling behind with the schedule and not conducting the needed maintenance to the wells were the two main reasons behind the shortage of gas and causing the major power cuts,” he added

The source said that we cannot deny that the local demand have rose, but the government should know better about this holy month to be primed enough for it, with long promises of meeting the local demand is a priority.

According to reports, “The power outages and recriminations between the oil and electricity ministries over who is responsible for them have embarrassed the ruling party”.
Mohamed Awad, Head of the Electricity Holding Company, confirmed that recent power cuts were a result of the Ministry of Petroleum not providing electricity plants with enough natural gas.

The reports also added that the renewed protest against a gas deal that supplies Israel with an estimated third of its natural gas consumption has some linking to the power cuts because of gas shortages.

These protests are close in time with the article published in the New York Times, “Natural Gas Deposits Improve Israel’s Energy Outlook”, that stated, “For the past few years, Israel has bought gas piped from Egypt.”

Official sources from the Ministry of Petroleum answered back by promising that the ministry will reduce gas exports over the next few weeks so that there is more available gas to satisfy local needs, according to Al-Masry Al-Youm. “A reduction in gas exports is the logical solution to satisfying the needs
of the major gas-consuming sectors in Egypt.”

Gas exports to Jordan have also decreased by 30 percent since the beginning of the year, which has caused complaints from Jordanian officials at meetings between the two countries.

Mahmoud Lateef, Head of the Egyptian Natural Gas Holding Company, had earlier told Al-Masry Al-Youm that the Petroleum Ministry gives priority to fulfilling local needs for gas, particularly those of the electricity and industrial sectors.

This controversial situation raises several questions about the announcements made earlier this year about numerous gas discoveries in the country, starting early with GDF and Dana Petroleum’s new Gas discovery. Melrose also announced gas discovery with reserves of 30 Billion cubic feet of gas onshore Egypt, in the Sidi Salim formation in the South East Mansoura concession, in which Melrose holds a 100 percent working interest. Besides, Dana Gas announced two gas discoveries in the Nile Delta. Both discoveries had estimated reserves of 8-13 billion cubic feet (bcf) and 27-57 bcf of gas with associated condensate. Moreover, the late agreement signed with BP Plc and RWE AG that changed the terms of two natural-gas production contracts in Egypt of the North Alexandria and West Mediterranean Deepwater concessions.

On the other hand, Hamdy Abu Al Naga, the petroleum expert finds that we need to make the most of our gas produced by turning to the new technology of Gas to liquids (GTL), which is a refinery process to convert natural gas or other gaseous hydrocarbons into longer-chain hydrocarbons such as gasoline or diesel fuel. Using gas-to-liquids processes, refineries can convert some of their gaseous waste products (gas flare) into valuable fuel oils, which can be sold as is or blended only with diesel fuel. It may also be used for the economic extraction of gas deposits in locations where it is not economical to build a pipeline. This process will be increasingly significant as crude oil resources are depleted. Royal Dutch Shell produces a diesel from natural gas in a factory in Bintulu, Malaysia. Another Shell GTL facility is the Pearl GTL plant in Qatar, the world’s largest GTL facility. A Qatar Airways Airbus A340-600 conducted the world’s first commercial passenger flight using a mixture of kerosene and synthetic Gas-to-Liquid fuel in its flight from London’s Gatwick Airport to Doha. Qatar is considered one of the leading countries to carry out such technology.

The chairman also added in the matter of finding solutions to deal with this crisis, that we need to attract more investments into the country. “It can only be done by being clear with our information. Also to provide up to date records and data to the investors.”

“We need to act very smart with the investors, especially foreign investments. They like clarity and specific figures.”

Additionally, an official source that refused to mention his name that the government should always amend its policies to adjust with the international changes, “We are now connected to the outer world more than any time from before. So we need to provide the best service to the investors, and this won’t come if we were not up to date.”

He added that the authorities should provide all the needed help to overcome the obstacles that stand in the way of growing, either with prices or geological reasons. “We can also give more advantages to the investors to draw them more into our local market.”

The top official saw that keeping a constant production rate of our wells should be the main goal of our companies, “This will not be reached unless they kept on working on their plans, especially the development plans and to keep anything that would stand in the way of this plan. Preservation and upgrading the well should be a persist vision to our companies.”

“The current crisis is soon to be solved as we hope. The news that reached us that the government has sat down with fallen behind schedule companies and they are working on a plan to go on with their original development plans,” he alleged.


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