Weighing the two sides!

Some would see it as a good move, “It would be a good idea to import the gas cheaply from Iraq and lock in at that price for the future, if Egypt has the view that gas prices will go up on the long term.”, others may oppose it, “Has the minister finally awakened to the tragedy of Egypt’s wasted petroleum resources.

It started with the announcement made by the Egyptian Minister of Petroleum, Eng. Sameh Fahmy, to the Energy Committee of the Ruling National Democratic Party (NDP) saying that the idea of importing gas from Iraq now would take advantage of the current global price drop. The timing couldn’t be anymore closer to the Iraqi Petroleum Minister Hussein el-Shahrastani statements, who recently announced that the European Union was also interested in importing natural gas from Iraq via the Arab Gas Pipeline, that extends through Syria and Jordan into Egypt, where gas can be liquefied before being re-exported to European markets.

Egypt has recently boasted the world’s biggest gas liquefaction facility, located in the coastal city of Damietta, which a source close to the Energy Committee reported that the minister saw the potential of using it for re-exporting Iraqi gas. The facility, which costs a total of $1.3 billion, can convert 7.5 billion cubic meters of natural gas into 4.8 million tons of liquid gas per year.

The reports that made this huge fuzz in the newspapers were denied by Samy Shahin, Member of the NDP Energy Committee, who explained that these allegations “took a wrong turn”, and that it is all still under consideration. He stated that Egypt will not be importing gas, and that Europe is aiming to buy the Iraqi gas and transfer it through the Arab Gas Line, which means they would reverse the flow of gas and inaugurate a new pipeline from Iraq passing through Egypt reaching Europe.

Shahin further added that Egypt’s split would be either to take a share of that gas passing through its land or to inspect tariff. All the Indications point to the first suggestion, specially that the Petroleum Minister lately issued his directions to speed up the delivery of natural gas to households, adding that this year’s plan includes the delivery of gas to 600 thousand houses, which means that Egypt is in a great need for gas and looking for each and every way to get it, but still without being called an importer! In a way, it is good for Egypt’s reputation to look for other ways to get the needed gas, but we have to put in mind that we are going to be taking gas from others, even if it fell under the concept of fees!

These needs came after a long road of wrong polices, according to what Anwar Esmat Al Sadat, the Deputy Founder of The Reform and Development Party (RDP), said that this issue was addressed at the Plan and Budget Commission meeting raising the topic of importing Iraqi Gas or liquefied natural gas (LNG) from Qatar. Al Sadat criticized lots of what went through this meeting, especially what private companies in the local market suggested of building factories to liquefy this imported Iraqi Gas on the same footsteps of Iran and Turkey, and he strongly criticized the continual fueled subject around the old contracts, which made the Egyptian Gas sold at low prices.

Al Sadat added that it is all false allegations about the overflow of the gas in the market that allows it to be exported and that Egypt is not even close to become a bigger exporter than Iran and Qatar. Both First Undersecretary for Gas Affairs at the Ministry of Petroleum Eng. Tarek El-Hadidi and the Undersecretary for Investments Eng. Ahmed Ashmawy denied Al Sadat accusations, and assured that Egypt has enough gas according to the ministry’s statistics. Al Sadat also stated that the problem is in the incorrect wideness in exporting gas, which led to its shortage in the local market and to the importation suggestion.

Eng. Ibrahim Al Esawy, former first undersecretary for gas affairs, defended the importing proposal, adding that the time is perfect to benefit from the Iraqi Gas excess and the current lowered gas prices, which reached as low as $1.83, as the petroleum minister stated in the annual conference of reviewing the ministry’s accomplishments and plans for the upcoming six months.

The conference that started the whole conflict, in which the petroleum minister stressed on the importance of taking advantage of the recent low gas prices in the markets, and that the ministry had offers from Arabian companies in the local market to buy the foreigner’s share and to build plants to liquefy the Iraqi Gas to use it in their projects and supply the local market, which as the minister pointed “is the main concern of the ministry” and the reason behind considering the whole idea of approving on the reverse overflow of Iraqi Gas.

Fahmy’s comments were met with criticism from groups long opposed the export of Egyptian gas at low prices. These groups have argued that exporting the gas equaled a shortfall in covering the demand of the local market. The Minister’s statements will only confirm their view; though the ministry of petroleum previously tackled this matter by announcing there will not be any Egyptian gas exportation until they cover the local demand. The campaign criticized Fahmy for not listening to the voices of experts who had previously stated that the rate of exporting Egyptian gas would lead to a situation where internal demand would not be met. This campaign responded to Fahmy’s statements in an announcement released to the press, “The petroleum ministry exports gas at very low prices, when it should have been used domestically to create electricity, instead of importing petroleum products at very high prices… Egypt is no longer an exporter of oil and gas as you claim and the exportation of our gas was a catastrophic decision.”

All we need to do is to sit and wait; the upcoming days will clear all these rumors. We just hope that Egypt would be making the right decision, as this new use for the Arab Gas line could place Egypt on the international map; especially that Europe is looking for each and every way to secure its supply of Gas away from the Russian continued quarrels with its neighbors exposing Europe to suffer from gas cuts in the winter, and that could make the extension of the Arab Gas line take Egypt to a new international era.

By Sama Ezz El-Din


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