BY: AMINA HUSSEIN, REHAM GAMAL, AND TASNEEM MADI
Bidding processes play a vital role in flourishing the exploration activities and creating an attractive investment climate for Egypt's hydrocarbon industry, which leads to promoting the Egyptian petroleum agreements.

By: Amina Hussein, Reham Gamal, and Tasneem Madi

Egypt is not only considered as a wealthy country due to its abundant oil and gas resources and discoveries; but also, it is fortunate to have continuous government legislative pro-market reforms, especially between 2014 and 2019. Focusing on the legislative improvements, there were a number of laws, amendments and issuances. For instance, the Gas Market Activities Law No. 196 of 2017 aims to liberalize the natural gas sector and attract investments.

BY AMINA HUSSEIN, REHAM GAMAL, AND TASNEEM MADI

The natural gas activities in Egypt witnessed significant improvements starting in 2015. The government worked on several pillars to take advantage of these developments, including the legal aspect.

In Egypt, the supply chain in the natural gas market operates under the direction and supervision of the Ministry of Petroleum and Mineral Resources (MoP). The Egyptian natural gas market was first managed by the Egyptian General Petroleum Corporation (EGPC) before moving under the supervision of the Egyptian Natural Gas Holding Company (EGAS), according to the US Energy Information Administration’s (EIA) Country Analysis Brief: Egypt in 2018. Prior to 2017, the natural gas activities in Egypt were covered by law No. 217 for 1980. Under this law, EGAS was responsible for all operations relating to exporting, transportation, and domestic supply of natural gas to different sectors. Post-2017, the situation changed with the approval of the new Gas Market Law No. 196 for 2017.

Natural gas becomes an essential pillar of energy supply in the Egyptian economy. With the development of natural gas fields, the production rates are brought closer to 5 trillion cubic feet (tcf), between fiscal years (FYs) 2018/19-2019/20; over 50% of which was contributed by the giant Zohr discovery. These developments helped Egypt achieve self-sufficiency and meet domestic needs of natural gas.

Egypt is one of the best destinations for investments, especially in the petroleum sector. This is mainly due to the proactive measures taken, as well as the Central Bank of Egypt (CBE) and government entities’ several initiatives in various sectors. Additionally, the adopted investment law and the newly set business-friendly regulations play a vital role in creating a perfect host for investments. Egypt was also one of the 10 largest manufacturing countries in 2019, where the manufacturing sector, including refining, contributed $108 million.

Through the path to become a regional natural gas hub, Egypt was able to balance its performance in natural gas Exploration and Production (E&P) activities within one of the most tragic periods facing the global petroleum market. While the international oil and gas markets suffered from the COVID-19 negative effects, the Egyptian Natural Gas Holding Company (EGAS), in the latest annual report of fiscal year (FY) 2019/20, remarked an annual increase of 53.3% in the number of natural gas discoveries in Egypt. This is in addition to keeping a significant production rate of approximately 6.6 billion cubic feet per day (bcf/d).

The petroleum sector is considered one of the engines of the Egyptian economic growth. Over fiscal years (FYs) 2014/15-2018/19, the petroleum extraction’s contribution to the gross domestic product (GDP) significantly amounted to about EGP 342 billion, on annual average. Meanwhile, the sector outstandingly succeeded to attract average investments of about EGP 70 billion annually, representing more than one-eighth of the total investments, according to the Ministry of Planning and Economic Development’s (MPED) data. This was a result of the ministry of petroleum’s (MoP) plan to encourage and promote the Exploration and Production (E&P) activities in different regions. From the country’s Balance of Payments (BOP) side, the petroleum sector’s exports accounted for $8.5 billion (EGP 143.31 billion), on annual average, exceeding one-third of the total exports, according to the Central Bank of Egypt’s (CBE) data.

Egypt is the second largest oil refining country in Africa, acquiring about 23% of the total domestically-refined crude oil in Africa. There are 12 refineries in Egypt, operated by the Egyptian General Petroleum Corporation (EGPC), with a total capacity of 795,000 barrels per day (bbl/d) in 2019, according to BP’s Annual Statistical Review of 2020. The Ministry of Petroleum and Mineral Resources (MoP) has been working on fulfilling self-sufficiency of petroleum products since 2016, when imports reached 10 million tons (mmt) annually at a cost of $4.5 billion (EGP 75.9 billion), noting that these rates declined during 2020, reaching 3.5 mmt with $1.5 billion (EGP 25.3 billion).

Egypt has reclaimed its position as the hydrocarbons regional hub, especially when it comes to natural gas. In fact, the country has converted from being a natural gas net importer to being a net exporter in 2018. This phenomenon happened as a result of the major natural gas discoveries that increased natural gas production levels. The major developments in natural gas production were combined with the exceptional infrastructure that paved the country’s path to become a regional natural gas hub. Egypt has one of the largest liquified natural gas (LNG) infrastructures in the region, which include two liquefaction plants located in Idku and Damietta.