Energy is considered the main incentive for development processes. It was and will always be the first means for raising the citizens' standard of living. Egypt depends on several available energy sources, i.e. oil, natural gas and electricity, as well as new and renewable energy exemplified in solar, wind and bio-mass energies. Besides, establishing a nuclear station is being considered.

 

Egypt has used electricity for lighting purposes since the beginning of the 20^th Century. In 1930, electricity was used in the fields of agriculture and industry. Starting from 1960, Egypt started generating electricity from hydraulic sources where Aswan Reservoir station was established in 1960 with a capacity of 340 MW.

The high Dam project had its effective influence on providing an important source of energy when the High Dam station began operating in 1968 with capacity of 2100 MW. This source of energy contributed in making a great industrial upraise and in lighting great part of the Egyptian rural area, consequently, contributed in achieving a significant social move during this period.

 

By the increase in power consumption rate in Egypt; reached 7 percent in average annually, there was an expand in hydraulic power generation stations. Aswan Reservoir station (2) was built in 1985, in addition to Esna and Naga' Hammadi stations. Hydraulic power plants constitute about 18 percent of total consumed electric power in Egypt.

Egypt witnessed an expand in establishing thermal stations that use oil and natural gas. The period (1981-2004) witnessed establishing 27 thermal plants. It also witnessed an expansion in using natural gases in electricity generating plants that consume now about 64 percent of total consumption of natural gases in Egypt.

 

By the advent of the new millennium, electricity sector was keen on establishing a new concept aiming at rationalizing the use of power as well as achieving integrity within the system of “energy, development and environment”. This can be achieved through supporting giving due attention to using new and renewable energy sources to produce clean energy.

Solar energy represents a promising source in Egypt. Solar radiance hours in areas ideal for using solar energy in Egypt range between 2300 to 4000 hours/year. Solar energy in now used in water solar heating for household and industrial usages as well as generating electricity through photovoltaism. A solar energy generator station was built at al-Kuraimat, south of Cairo at a cost of US Dollar 125 million with capacity of 150 MW. Electric power generated from solar plants is expected to reach 6.6 billion kw/h in 2007.

 

Wind represents a favorable source for producing energy through the areas of Suez Gulf, Red Sea Coast between Ra's Ghareb and Safaga and East of Owainat as these areas are characterized by a wind blow at a relatively constant velocity. Average wind velocity in these areas reaches 10 m/sec. Wind-power electric generator plants were erected in Hurghada and az-Za'afarana with a compounded capacity of 145 MW. New wind plants with capacity of 285 Mw are under construction in az-Za'afarana through cooperation with the Japanese and German governments.

 

Electricity sector applied a chain of procedures with the objective of protecting the environment. On top of which is evaluating the environmental effects of the projects of electric power as a basis to agree on the feasibility of the project. In addition, programmes of air and water quality surrounding electric power plants were applied, besides applying engineering and techonological systems to reduce pollution resulting from exhausts of electricity generating plants. These procedures contributed in reducing carbon dioxide emission agent for every kw/h by a ratio of about 45 percent during the period (1981/82-2004/05) as the agent reached about 0,56 kg carbon dioxide/kw/h in the year 2004/05.

 

Implemented investments in electricity sector through the past two decades exceeded LE 70 billion. Total investments of 2004/05 reached about LE 5.314 billion. These investments contributed in promoting efficiency of this sector and in its success to provide electric energy for all uses and for about 99 percent of population and started exporting as well. This has taken place after the sector succeeded in establishing the united electric grid that connected between all electricity generating plants from one side and consumption centers from another.

The united electric grid in Egypt has been connected to the Arab and African countrys' grids. It is planned to be connected to European countries in the future. The net exchange between Egypt and Linkage countries (Jordan and Libya) reached about 688 million kw/h with total value of US Dollar  31.2 million during the year 2004/05.

 

The electricity sector succeeded in increasing the amount of generated power from 18 billion kw/h in 1981 to 104.7 billion kw/h in 2004/05 due to the increasing demand for electric power.

The amount of generated power reached about 91.7 kw/h from thermal plants, 12.6 million kw/h from hydraulic plants, and 0,5 billion kw/h from wind plants.

Total consumed power during this year (2004/05) reached about 90.2 billion kw/h. The industrial sector consumption reached about 34.4 percent of which the domestic uses reached 36.4 percent and agriculture and irrigation reached 3.8 percent.  The lengths of electricity lines on different voltages reached about 377,000 km covering all parts of the country.

 

Petroleum and natural gas represent the mainstay of development in the world for long years coming. Petroleum secures about 92 percent of primary power needs in Egypt. It also represents a fundamental mainstay in Egyptian economy as it comes on top of Egyptian exports and is considered an important source of hard currency.

In the 1950s, Egypt was importing third of its needs of petroleum. At that time, Egypt was owning a limited remainder of crude oil reserve which reached 25 million ton as well as a limited production that reached 2.6 million ton annually. As a result of the state's concern about developing its resources from this important natural wealth, the General Authority for Petroleum was established in 1956 to organize work in petroleum sector. Moreover, the first national company for petroleum prospection and production was established in 1957, along with it petroleum industry started in Egypt.

 

Prospection and discovery efforts have contributed in raising the actual reserve of petroleum and gas, in increasing the produced amounts and in increasing the relative importance of the petroleum sector for the Egyptian economy especially since the 1970s. With the continuous prospection and discovery, the actual  reserve of crude oil and gas has increased from about 3.6 billion barrel equivalent in 1981 to 15.5 billion barrel equivalent at the end of 2004.

 

The first independent Ministry for petroleum was established in 1972 due to the increasing relative importance of petroleum sector for Egyptian economy. The ministry contributed effectively in developing the Egyptian petroleum wealth. Furthermore, in order to provide developed and flexible mechanism, the petroleum sector was restructured in the advent of the new millennium. Now, the petroleum sector includes besides the Ministry of petroleum other specialized bodies represented in the General Authority for petroleum, Egyptian Natural Gases Holding Company, Egyptian Petrochemicals Holding Company and South Valley Holding Company for Petroleum.

 

An integrated strategy has been formed for petroleum industry. It is based on supporting reserves from petroleum and gases as well as increasing their production, fulfilling local demand of petroleum, gas and petrochemicals, supporting exports and dealing with the developed countries, in addition, absorbing modern technology and attracting international investments to work in Egypt.

 

During the last 15 years, Egypt ranked first among OAPEC members in terms of the number of oil discoveries. The number of discoveries during the last two decades reached about 546 discovery.

The year 2003/04 witnessed 49 new petroleum discovery, including 38 crude oil and 11 natural gas. Crude oil has been explored in the Delta for the first time, which reflects the future horizons for increasing crude oil and natural gas reserves. 

 

Petroleum sector succeeded in attracting foreign investments to work in Egypt in addition to cooperating with international companies. The number of agreements arrived at for petroleum prospection and exploitation reached 121 agreement. The number of international companies working in Egypt in 2004/05 reached about 60 company, 6 of which are American, 22 European and 18 of different nationalities.

 

During 2004/05 investments for oil prospection and its development concerning foreign and joint companies working in Egypt reached about US Dollar 3.3 billion. Public investments reached about LE 1527 million.

85 percent of crude oil in Egypt is being produced from offshore fields. The first discovery of crude oil in deep water in the Mediterranean has been achieved. Consequently, it leaves the door open for Egypt to enter a new era of activities of prospection and development of oil and gas in deep water. Moreover, it attracts international petroleum companies for more prospection.

Petroleum production is concentrated in five main areas; Suez Gulf which produces 43 percent of total production of crude oil and 8 percent of gas production, Eastern Desert which produces 8 percent of crude oil, Western Desert which produces 21 percent of oil and 26 percent of gas, the Mediterranean Sea whose production reaches 6 percent of oil and 59 percent of gas, Sinai area which produces 12 percent of oil and 1 percent of gas.

 

Total production of petroleum wealth (crude oil, condensates, butane-gas and natural gas) reached about 58.9 million ton during the year 2004/05. It is considered the highest production achieved in the history of petroleum sector. Production from petroleum and petrochemicals reached about 35 million ton.

Within the framework of preserving Egypt's wealth from petroleum, Petroleum sector followed a policy for rationalizing crude oil production. Total exports of crude oil, natural gas, petroleum products and petrochemicals reached about 20.5 million ton during 2004/05 including exports of international companies working in Egypt. During this year, export value of petroleum sector and investment companies reached US Dollar 5952 million including the value of foreign partner exports. The value of high quality exported petroleum products reached about $ 1 billion. 

 

Egypt has many characteristics that encourage the greatest international companies to invest in petroleum sector, natural gas and petrochemicals. On top of which is the presence of national integrated industries in fields of exploration, production, refining, transportation, distribution and exportation, in addition to Egypt's strategic location. Petroleum industries have realized tangible progress. Egypt started embarking upon new field as natural gas liquefaction and exportation projects as well as liquefied propane and polyethylene among other production projects.

 

Petroleum sector policy aims to insure the state's increasing needs from high quality petroleum products. Refining industry is considered one of the important stages in petroleum industry. There are nine refineries in Egypt, 8 of which are owned by the state. Their productive power reach about 30 million ton annually. In addition, MEDOR refinery is considered a distinguished example of an environment-friendly-refinery designed according to standards and specifications set by Europe in 2005, its productive power reaches about 5 million ton annually. Refineries spread covering all parts of Egypt and crude transmission networks lengths reach 4600 km.

 

Natural gas was first used in Egypt during the 1970s. During the 1990s, natural gas demand increased as it is considered the best fuel, in addition to the steady increase of natural gas reserves in Egypt.

 

Proven reserves of natural gas reached about 66 trillion feet³ in December 2004, in addition to extra reserve ranging from 80 to 100 trillion feet³ that researches pointed out the probability of their presence. This contributed in Egypt's being strongly present on the natural gas exportation map as Egypt ranks seventh in producing natural gas worldwide. It is expected to rank the fifth by the advent of 2006.

 

In July 2003 Egypt joined the countries exporting natural gas when started to be pumped through the gas pipeline el-Arish-Taba-A'qabq, first stage. The year 2005 witnessed Egypt's affiliation with the countries exporting liquefied gas, besides, navigation of the first giant tanker of liquefied natural gas to Spain.

Petroleum sector succeeded in attracting foreign investments to participate in implementing the greatest two projects of natural gas liquefaction and exportation. Natural gas liquefaction   plant placed in the free zone in Damietta is considered the greatest one in the world in terms of design and total power that reaches 7.5 billion m³ of natural gas annually. This amount is enough to produce 4.8 million tons of liquefied   natural gas. The project's investments reach about US Dollar 1.3 billion and is implemented by a Spanish-Egyptian company, 20 percent is the ratio of petroleum sector contribution. Liquefied gas is exported to Spain and Italy. By the advent of 2005, experimental operation of Damietta factory started.

 

Investments of Edko's Gas Liquefaction   Compound project, including two units for gas Liquefaction with production power 10 billion m³ annually, reach US Dollar 1400 million. An English company contributes in its implementing by ratio of 35.5 percent, a Malaysian company by ratio of 35.5 percent, a French company by ratio of 5 percent and the Egyptian Natural Gases Holding Company by ratio of 24 percent. The year 2005 witnessed exportation of the first cargo of liquefied gas from Edko compound to France and the first experimental cargo of liquefied gas to the United States of America as well.

 

Length of natural network of gas pipelines reaches 14300 km, feeding about 95 percent of total electricity generating plants all over the country. In addition, it feeds industrial areas, a great number of big factories and more than 2 million domestic and commercial clients. Egypt ranks a position among the first ten countries using natural gas as car fuel worldwide. Now, a plan is being implemented to convert 100,000 cars to work with natural gas so that Egypt can rank the fifth among the world countries in this field recently.

 

Petrochemical industry is considered a prominent industry in this era. It represents the best use of natural gas reserves and achieves the greatest added value contributing in supporting national economy. It is also considered one of the strategic industries that many complementary industries in other sectors are based on.

 

Since the 1980s, Egypt started entering petrochemicals industry by establishing Petrochemical Compound in Alexandria. A long-term plan started to be implemented to achieve self-sufficiency of petrochemical products and provide an extra for exportation. The plan includes 14 petrochemical compound with investments US Dollar 10 billion contributing in producing 15 million ton petrochemical products annually.