If there is a single word that defines every facet of tomorrow’s energy markets, it is competitionfor resources, for opportunities, for customers, for qualified employees and for capital.
Beginning with significant petroleum resources of its own, Egypt’s government and private companies have developed the strategies and capabilities to grow and prosper in this competitive environment.
A capital-friendly investment tradition has opened opportunities to Egyptian and international companies, both upstream and downstream. A trading culture and high quality products have helped penetrate a wide range of export markets. And Egyptian companies and agencies have well-defined programs to develop the workforce and meet health, safety and environmental responsibilities.
All these advantages will be critically important as world market trends unfold.
A global context
According to the U.S. Energy Information Administration (EIA) International Energy Outlook 2007, world marketed energy consumption will grow by 57% between 2004 and 2030. And this growth will occur even with continued high oil and gas prices.
Liquids will supply the largest share of world energy consumption over the period, but their share falls from 38% in 2004 to 34% in 2030, largely because oil prices remain high, according to EIA. World liquids consumption in the report’s reference case increases from 83 million b/d in 2004 to 118 million b/d in 2030. Two-thirds of the growth will be in the transportation sector.
Rising world oil prices after 2015 will increase gas demand, said the agency. And world natural gas consumption will grow by 1.9%/year from about 100 tcf in 2004 to 129 tcf in 2015 and 163 tcf in 2030. In both total energy and natural gas, the fastest growth is in non-OECD (Organisation for Economic Cooperation and Development) countries, where natural gas consumption increases more than twice as fast as in the OECD countries.
The good news is that global petroleum resources are very large. As of January 1, 2007, proved conventional world oil reserves were 1,317 billion bbl, according to Oil & Gas Journal24 billion bbl higher than in 2006. Heavy oil resources around the world are several times as much.
Proved world natural gas reserves are 6,183 tcf71 tcf higher than in 2006, according to the Journal report.
And then there are undiscovered reserves. The U.S. Geological Survey (USGS) estimates global undiscovered natural gas reserves at 4,136 tcf. Of that total, an estimated 3,000 tcf is “stranded” reserves.
Oil and gas prices are expected to remain high, but costs will continue to increase, too. Meeting that challenge will require new technology, more efficient work processes and innovative partnership arrangements.
On the right track
There are two important ways a country can ensure a successful energy future: diversify supply, both geographically and by source; and optimize the value of natural resources. With a strategy that includes energy sources and markets from crude oil, to petrochemicals, to biodiesel, Egypt has a clear focus on these goals.
Egypt has properly made the development of natural gas and the exploitation of its deepwater Mediterranean discoveries and prospects top priorities. World gas markets will be strong for the foreseeable future, and technology and price will continue to lower the economic threshold for deepwater development.
The petrochemical master plan is also a critical element in optimizing the value of Egypt’s oil and gas resource. With Egyptian companies playing an important role in the industry, the country can guide the direction of its future and benefit from its success.
Beyond the traditional responses to energy needs, Egypt is “ahead of the curve” in several areas, including the development of compressed natural gas and biofuels for the transportation sector. In all industry segments, Egypt’s own companies are increasing capability and expertise to compete. And whether oil, gas, or petrochemicals, Egypt’s strategic location will continue to be an advantage.
Whatever the details of a strategy, the foundation is capital. Egypt’s petroleum development strategy recognizes the importance of an investment environment that will attract companies that can help it achieve its energy goals.
EGYPT GENERAL DATA & ECONOMIC INFORMATION
- Official Name: Arab Republic of Egypt
- Capital: Cairo
- System of Government: Multi-party Republic
- President: Hosni Mubarak (since 1981)
- Prime Minister: Ahmed Nazif (since 2004)
- Languages: The official language is Arabic which is spoken by the majority of the population, although other important minority languages include Coptic, Nubian and Berber.v Location & Geography: Egypt is located in the north-eastern corner of Africa.
- Climate: The larger part of Egypt has a desert climate which is hot and arid. There are two seasons.
- Land Area: 384,344 sq mi (995,451 sq km); total area: 386,662 sq mi (1,001,450 sq km)
- Population (2006 est.): 78,887,007
- Currency: The official currency is the Egyptian Pound (EP).
- GDP/PPP (2006 est.): $334.4 billion; per capita $4,200.
- Real Growth Rate: 6.8% GDP Inflation: 5%. Unemployment: 10.3%
- Industries:Textiles, food processing, tourism, petrochemicals, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufacturers.
- Natural Resources: Petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, zinc.
- Exports: $20.55 billion f.o.b. (2006 est.) crude oil and petroleum products, cotton, textiles, metal products, chemicals.
- Imports: $33.1 billion f.o.b. (2006 est.) machinery and equipment, foodstuffs, chemicals, wood products, fuels.
- Major Trading Partners: Italy, U.S., Spain, U.K., Syria, Saudi Arabia, Germany,China (2006).
Source: Altapedia, Governments on the WWW
ENERGY OVERVIEW
- Energy Minister: Sameh Fahmy (Minister of Petroleum)
- Proven Oil Reserves: 3.8 billion bbl (1 January 2006)
- Oil Production: 700,000 bbl/day (2005 est.)
- Oil Consumption: 590,000 bbl/day (2004 est.)
- Net Oil Exports: 152,600 bbl/day (2004 est.)
- Crude Refining Capacity: 726,250 bbl/day (2005 est.)
- Natural Gas Reserves: 1.589 trillion cu m (1 January 2006 est.)
Source: EIA - Country Analysis brief on Egypt
ACKNOWLEDGEMENTS
We would like to thank the following people and organizations for their assistance, support and profound insight into the production of the second edition.
We thank everyone for their professionalism and enthusiasm that made this survey possible and a pleasure to work on.
It is wonderful to see the progress that has been made from last year’s publication and we hope that our vast number of readers in the energy sector have found this in-depth overview informative and a useful tool to the Egyptian energy sector.
First and foremost we thank the Ministry of Petroleum, the Honourable Mr. Sameh Fahmy whose dedication and vision has played a vital role.
The First undersecretary of the Minister, Eng. Shamel Hamdy and his assistant Riham Galal. Mr. Khaled Ghazaly undersecretary and Iman Orfy of International investor relations whom have been a joy to work with.
We give a special thanks to the following Public and Private companies for their collaboration and input without which this report would not have been possible.