Will Egypt be capable being regional energy hub?

CAIRO – 20December 2017: Petroleum Minister Tarek El-Molla announced on Monday, as he did many times earlier, that Egypt is going to be a regional center for energy and oil trade, which triggers the question of what capabilities qualify the country to reach the level the minister’s desires.

In his speech during a conference organized by Al-Ahram Press Institution on Monday, Molla affirmed that Egypt has infrastructure that enables the country to be a hub for the oil industry in the region.

“Egypt has 19 oil ports overlooking the Mediterranean Sea and the Gulf of Suez,” the minister said.

The country also owns the Sumed pipeline, which transfers most of the Arabian Gulf oil to Europe, as well as 9,500 km of lines capable of transfering crude oil and petroleum products. This is in addition to eight refineries with a capacity of 38 million tons annually and 15 million tons of storage capacity for crude oil and products, Molla added.

Egypt has suffered a sharp lack of natural gas and oil products for nearly three years since the tensions that hit the country on the back of the ouster of former President Hosni Mubarak, which caused a suspension of gas production as a result of the big debts to the foreign producing companies.

However, the government managed to pass the crisis thanks to a successful economic reform program that started to be implemented in November 2016.

The reform program included floating the country’s local currency, which contributed to raising the foreign reserves to reach nearly $36 billion, as announced by the Central Bank of Egypt (CBE); therefore, it could repay big parts of the debts due to foreign firms.

The producing companies restarted production after getting some of their money, and new discoveries were announced that changed the map of gas production in Egypt and the way of thinking over investment in that field in Egypt.

Egypt's natural gas production reached about 5.5 billion cubic feet a day, up from 4.6 billion cubic feet a day in 2016, after linking a number of new discoveries to the national gas grid.

The minister added that infrastructure used to transport natural gas includes a major network with a total of 7,000 km and a distribution network of 3,000 km, as well as 29 gas treatment plants and two liquefied natural gas (LNG) complexes in Damietta and Edko.

Egypt also has two floating liquefied natural gas (LNG) units, with a capacity of about 1,300 million cubic feet per day.

The minister said that all neighboring countries can benefit from setting up such gas hubs. On the one hand, Egypt will benefit from its own infrastructure, which will provide added value and create new jobs.

Cyprus is one of the countries that will have advantages, as it signed an agreement in late November stipulating the establishment of a new pipeline plant of liquefied natural gas running from Cyprus to Edko.