19 August 2018 01:09 PM

Egypt..gas industry regional hub

Thursday، 22 February 2018 12:00 AM

Egypt has turned into a regional energy center in the region, and new gas discoveries in East Mediterranean whether in Egypt, Greece, Cyprus or Israel have had three methods to handle before use: either they are handled through discovering countries or through Egypt or Turkey.

According to the Spokesman of the Presidency statements, any country that has this advantage must meet the basic conditions. The first is to be a gas-producing country in large quantities, which is  applicable now to Egypt, the second one is to transport, circulate and distribute gas – which is provided by the recent gas agreement. It should also have gas and liquefaction stations. Most countries in the region do not have gas liquefaction stations, while Egypt has two gas stations in Idco and Damietta.

US Bloomberg website said Cyprus is nearing an agreement to sell natural gas to Egypt, marking the second potential supply deal in as many days with the North African country trying to position itself as a regional energy hub after the startup of the giant offshore Zohr field.

On February 19, 2018, the Israeli Delek Drilling company announced the signing of a 10-year contract worth $ 15 billion with the Egyptian Dolphinus holding company to export natural gas to Egypt. This deal has been concluded despite the announcement of the Egyptian Ministry of Petroleum that by the end of 2018, Egypt will have realized natural gas self-sufficiency and even a surplus in 2019.

Although this deal belongs sheerly to the private sector, it will  benefit the company on the  commercial  level in accordance with the rules governing the Gas import in terms of the  Regulations of the Gas Market and its executive schedule. Also, the Egyptian government will indirectly enjoy economic revenues. The main reasons behind this deal can be summarized as follows:

1.Re-operation of the suspended Egyptian gas liquefaction units due to insufficient Egyptian gas for exportation.

Egypt has two gas liquefaction plants. The first is the Edco plant owned by the Egyptian company for liquefied natural gas, with  two liquefaction units. The other one is in Damietta, affiliated to an Italian-Spanish company with only one unit.

The function of these units is to convert natural gas from the gaseous state to the liquid state, so that it can be loaded on ships and exported rather than pumped into the pipes. The units have stopped working lately because of the deficient local gas production and Egypt became a mere gas importer in order to bridge the gap between production and consumption. Despite the latest discoveries, on top of which are Zohr Field, the local production is insufficient to re-operate these units.

2. In accordance with the market mechanisms, Egypt has become a regional centre for gas industry and export to the world for having facilities and expandable infrastructure in the form of pipelines and gas liquefaction units rather than any other Eastern Mediterranean countries, thus gaining more weight in the natural gas industry. Egypt’s distinguished geographical location and the latest discoveries, render Egypt a pivotal country able to link the Greek Cypriot gas with the liquefaction stations to export it to Europe until the  gas pipeline between Egypt, Cyprus and Greece is finished  to link it with Europe. Until this pipeline is launched, Egypt is the only centre for discharging the East Mediterranean gas to Europe and the world via the Egyptian liquefaction stations.

3. The cheap price of the Israeli gas compared to liquefied gas additionally insures meeting the Egyptian need of natural gas, even through private companies, which reduces the burden shouldered by the government to supply gas to the industrial sector, enables it to provide power plants with energy and helps fulfill all needs of energy and gas for the State underway national projects, which increase the growth rates aspired by the government.

4. The Egyptian government gains indirect revenues when the private companies purchase gas, whether Israeli or otherwise, through collecting fees in return of using the national network of gases and incomes of using Egyptian liquefaction stations.

5. Settlement of international arbitration cases against Egypt as a result of halting gas export to Israel in 2012.


 


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