 Fueling the Region |
Egypt's energy sector has made significant strides in the last year, and the government has taken significant steps toward greater energy exports, especially natural gas.
Important new reserves have recently been discovered on Egypt's northwest Mediterranean Coast. Analysts have confirmed that the gas potential of these new fields amounts to 80 trillion cubic feet (tcf), and there is further speculation that the off-shore tracks could hold 100 tcf or more. These reserves include the West Delta Deep Marine, where BG International of the UK is developing two fields that will be producing 530 million cubic feet per day beginning in 2003; the West Mediterranean Deep Marine, involving BP; and the Northeast Mediterranean Deep Marine being developed by Royal Dutch-Shell.
"We are looking to develop all possible avenues: gas to liquid, gas to petrochemicals, gas through pipelines. Just name it, and we are doing it," says Egypt's Minister of Petroleum Sameh Fahmy . "We have a very exciting strategy, with some challenging objectives." Fahmy's main objective is to develop export markets for natural gas, "since without the markets you cannot start to exploit the resources."
EGPC Chairman Mohamed Tawila agrees: "Gas exports are our number one challenge, and we also face the challenge of maximizing the utilization of gas components.
After the increase in proven gas reserves, we have ascertained that the home market can be met."
The Ministry's integrated gas strategy has involved the development of the Egyptian Natural Gas Co. (Gasco) , "to expand the infrastructure of gas transmission and distribution, which is the core of theindustry," says Tawila, who worked alongside Fahmy to formulate the strategy.
Minister Fahmy is also planning to inject dynamism into the petroleum sector and increase private participation in public companies through IPOs on the stock market. "Like any other industry we are trying to utilize the open market," says Fahmy.
This year Gasco intends to issue an IPO, and plans are under way for shares to be sold in Midor, Midtap and Egypt Gas. "We would like to have other shareholders to support these companies financially, and to provide funds to be put back into developments in the industry," says Tawila.
Petrojet is a good example of the high standards of Egypt's oil and gas companies. The Petroleum Projects and Technical Consultations Co. is leading the way on numerous construction projects in the areas of oil refineries, oil and gas production, chemical and industrial projects. In order to compete with multinationals, Petrojet has had to restructure and build alliances. | 
"We are improving the internal structure of the company to increase our capabilities," says Mustafa Shaarawi , Petrojet 's new chairman and CEO. Highlighting current projects such as the construction of the Rosetta Gas Field Development for British Gas, Shaarawi stresses that Petrojet is "looking to establish a network of alliances with international companies, to work with them as a subcontractor or a joint-venture partner for construction."
Adding to the government's drive to export is the realization that for the first time since the 1970s, Egypt is running a deficit on its oil and gas balance of payments. While falling crude production from the Gulf of Suez--now 780,000 barrels per day, down from 900,000 per day in the mid-'90s--is nothing new, greater costs surrounding gas production are. As gas production has increased, so have the costs incurred by the Egyptian General Petroleum Company (EGPC) to pay foreign companies involved in field development. Also, rising domestic demand has led to greater imports of liquefied petroleum gas, totaling between $300 million and $400 million a year.
Foreign operators are working on projects to get Egypt's gas to new markets through pipelines or through liquefied natural gas (LNG). Agip of Italy and BP are working on gas pipeline projects through Israel and Jordan, respectively, while BG and Shell are concentrating on LNG exports.
Egyptian officials see Spain, Italy and Turkey as primary consumers of Egyptian gas, with Portugal and Greece seen as good prospects. Egypt's decision to go ahead with exports to Israel has given birth to the private-sector venture East Mediterranean Gas (EMG) , led by Hussein Salem, chairman of EMG and the Salem Group. EMG is currently approaching Egyptian gas producers and Israeli buyers, especially electric authorities.
Benefiting from this increased potential in Egypt's oil and gas market is the Pico Group , a dynamic holding company that is, according to CEO Salah Diab , "the first and so far only Egyptian independent company producing oil." Pico is looking at adopting new technologies in order to double existing output and produce LNG for export markets. |
