Energy & Utilities
From The Report: Egypt 2016
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Egypt is one of the oldest energy producers in the Middle East, with a history of commercial oil production dating back more than a century. The country benefits from low production costs and a relatively large volume of both onshore and offshore oil and gas fields. Developed infrastructure has allowed the country in past decades to maintain a sizeable export market, through shipped products and pipelines, as well as a sizeable downstream sector. However, recent years have seen production subject to more external pressures. Declining output from older fields, a traditional lack of investment in downstream sectors and a jump in domestic demand has led to the country wavering between being a net exporter and a net importer, while power plants and large-scale electricity consumers face load-shedding. The Egyptian energy sector is starting to turn the corner. After a number of years of supply and demand imbalances, the market is coming back into line. Egypt is a challenging environment, given the fixed prices, but it is also importantly, a potentially rewarding environment.

This chapter contains interviews with Tarek El Molla, Minister of Petroleum and Mineral Resources; Hesham Mekawi, Regional President, BP North Africa; Khaled Abu Bakr, Executive Chairman, Taqa Arabia; Hesham El Amroussy, Chairman and Managing Director, ExxonMobil Egypt; and Tamer El Mahdi, Deputy CEO, Orascom Telecom Media and Technology Holding (Orascom TMT).

Articles from this Chapter

Overview

Fresh ideas: New discoveries have oil producers optimistic about the future
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Egypt is one of the oldest energy producers in the Middle East, with a history of commercial oil production dating back more than a century. The country benefits from low production costs and a relatively large volume of both onshore and offshore oil and gas fields. Developed infrastructure has allowed the country in past decades to maintain a sizeable export market, through shipped products and pipelines, as well as a sizeable downstream sector. However, recent years have seen production subject…

Interview

Reform and develop: OBG talks to Tarek El Molla, Minister of Petroleum and Mineral Resources
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Interview: Tarek El Molla How important are Egypt’s fuel subsidy reforms? TAREK EL MOLLA: Egypt’s energy sustainability depends to a great extent on the management of local demand and the implementation of new subsidy reductions. As part of its major economic reform plan, the government has embarked on a comprehensive energy subsidy initiative to be implemented over five to six years. The first step was taken in July 2014 and has resulted in reasonable savings on energy subsidies. Despite…

Analysis

Turnaround tale: Improving energy prospects are boosting the overall economy
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The announcement in 2014 that BP, one of the largest foreign investors in Egypt, plans to spend more than $12bn on its Egyptian operations over the next five years marks a significant reversal of fortunes for Egypt’s gas sector as well as for the country’s revenues. That it should represent such a stark turnaround for Egypt is somewhat surprising. Egypt – which has been producing hydrocarbons for well over a century now and is the largest non-OPEC producer in Africa – has some of the region’s…

Interview

Promoting partnership: OBG talks to Hesham Mekawi, Regional President, BP North Africa
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Interview: Hesham Mekawi What is the potential for future large-scale discoveries offshore in the Mediterranean? HESHAM MEKAWI: Egypt’s offshore Mediterranean has a great future. It has the potential for large-scale discoveries and all the ingredients required to position Egypt as the future hub for the eastern Mediterranean. This country has potentially world-class resources below the ground, and the government is responsive and flexible in its desire to create the right conditions above…

Interview

Powering up: OBG talks to Khaled Abu Bakr, Executive Chairman, Taqa Arabia
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Interview: Khaled Abu Bakr What is your forecast for natural gas demand? KHALED ABU BAKR: Current demand for natural gas in Egypt is 52bn cu metres per year, of which 30bn goes to power generation. In the coming seven to eight years, the government is planning to add at least 15,000 MW of capacity, which will require an additional 15bn cu metres. While some capacity will come from other sources, gas will continue to be a leading fuel. It will take at least five years for the country’s first…

Analysis

Shale future: Developments in the US shale industry poses a challenge for African oil producers
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The single largest structural shift in the last decade’s global energy markets, the emerging output of shale gas and oil in the US, is having its most disruptive effect on African oil producers. The US’s reliance on African exporters, which reached a peak of 20.34% of US oil imports in 2007, has sharply reversed as domestic sources of similar light sweet crude in Texas and North Dakota have come online. While the impact of these developments on Egypt has been fairly limited, the broader evolution…

Interview

Strong ties: OBG talks to Hesham El Amroussy, Chairman and Managing Director, ExxonMobil Egypt
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Interview:Hesham El Amroussy What trends do you see in terms of demand for fuels and lubricants in Egypt? HESHAM EL AMROUSSY: Egypt has witnessed a steady economic recovery since mid-2014 – evident throughout a number of different sectors in the economy, and led by the launch of several mega-projects – which in turn has translated into positive trends in terms of demand in the Egyptian petroleum products markets. One relevant example might be the new Suez Canal project, which since…

Analysis

A promising development: A sizeable natural gas field discovery could see Egypt become a major exporter once again
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Natural gas has been an important part of Egypt’s energy mix and economy for decades. It was first discovered in the country in 1967, and a find was then made a year later offshore. Egypt fully utilised the resource, going from being predominately hydro driven to mainly gas based, and became an exporter of the product. At one time, Egypt sold its gas to Israel, Syria and Jordan with further plans to sell to Lebanon and Turkey. But increasing domestic demand, combined with plateauing production…

Overview

Opening new channels: A growing population means looking for energy production from traditional and non-traditional sources
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With a rapidly growing population of 80m people and a host of major energy-intensive industrial facilities, Egypt requires a large supply of power to maintain growth. Ensuring this steady production has been problematic since the end of the Mubarak era, and after several incidences of load shedding over the past few years – the legacy of underinvestment and maintenance in the country’s power sector – the government has decisively sought to increase the supply of power. This is happening through…

Interview

Strategy for power: OBG talks to Tamer El Mahdi, Deputy CEO, Orascom Telecom Media and Technology Holding (Orascom TMT)
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Interview: Tamer El Mahdi What opportunities will plans to boost electricity production create for private sector investors? TAMER EL MAHDI: Generally speaking, the perspective of the Egyptian government over the past few decades has been one that prefers government-led investment. The private sector, for the most part, had not really been encouraged to invest in certain fields, including electricity generation. All of this changed in 2014, when the current government decided that the country’s…

Analysis

On the table: A series of major deals with international players paves the way for significant growth
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A $9bn deal inked in Egypt will give a substantial boost to the country’s electricity generation capacity, helping the government address power shortages and support a growing population and economy. On June 3, 2015 German industrial conglomerate Siemens agreed a deal to supply gas and wind power plants that will add 50% − or 16.4 GW − to Egypt’s national grid.The deal, described as the biggest order in Siemens’ 168-year history, was signed during a visit by Egypt’s President Abdel Fattah…