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.

The Gulf of Suez and its surrounding areas are among the oldest known hydrocarbon provinces in the world in which crude oil was first discovered in 1868, according to Hamdy El Banby’s book entitled “The Egyptian Crude Oil: Past Experience and Future Insights”. The Gulf of Suez, along with the Eastern Desert and Sinai, are among Egypt’s main crude oil producing areas. The Gulf of Suez, the Eastern Desert, and Sinai produced a total of 87.7 million barrels (mmbbl) and 87.16 mmbbl of crude oil in the Fiscal Years (FYs) 2018/19 and 2019/20 respectively, according to the Egyptian General Petroleum Corporation (EGPC) data.

Downstream activities in the petroleum sector are essential for securing and meeting the domestic demand of natural gas. With this regard, the Egyptian Natural Gas Holding Company (EGAS) started natural gas connection activities in 1981. The activities target connecting natural gas to the consuming sectors, represented in industrial, commercial, and residential sectors, to replace butane with natural gas.

BY AMINA HUSSEIN, REHAM GAMAL, AND TASNEEM MADI
Transporting hydrocarbon products, from fields to refineries to end users, plays a vital role in facilitating both upstream and downstream activities. Globally, there are various means of transporting petroleum products including Railway tanks, pipelines, coastal tankers, and trucks. Likewise, Egypt depends on a variety of means and channels to transport petroleum products on both domestic and international levels.