Implementation of Egypt's gas strategy in light of the global trend of reducing costs

Tamer Badwy's picture
Tamer Badwy, Contracts & Procurement Manager, BP Egypt
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Egypt has the strategic vision to be a key player in the global gas industry during the next five years either on production or operation or trading levels. The country has all the required prerequisites to achieve this strategy and the key capabilities.

There are four major gas fields discovered in Egypt which started production in 2017. These fields; ZOHR, WEST NILE DELTA, NOOROS,  ATOLL, will raise Egypt’s natural gas output by 50% in 2018 and 100% in 2020. Egypt has one of the largest gas infrastructures in the Middle East and it has developed a national distribution grid to cover the country’s rapidly rising domestic energy consumption caused by:

  • Industrialisation
  • Urbanisation
  • Real-estate
  • Tourism Investments

There is a rising demand and increasing reliance on natural gas to meet local needs, specifically for power generation and electricity. Egypt’s population growth rate is one of the highest in the MENA region. The use of the capabilities of gas liquefaction to support the new discoveries of gas in neighbouring countries in the Mediterranean allows investment to many neglected areas, such as in upper Egypt, by connecting them to the natural gas grid and providing for their energy needs. Many new projects are still under construction to achieve Egypt’s goal of connecting a maximum number of factories to the National Grid. These new discoveries and encouraging fast-tracking development of new gas discoveries are restructuring the Egyptian gas sector.

The Egyptian Government's policy of supporting the private sector and attracting new investments in exploration and development. From importing to exporting natural gas, Egypt is fast becoming a key regional hub for energy and a global player in the industry and is transforming Egypt into a regional hub for trading and exchanging gas.

However, the main obstacle facing Egypt to achieve this strategy is the local and global trend towards reducing costs in light of the changes and fluctuations in the global energy market whereas one of the key factors of the success of this strategy is Egypt's ability to attract domestic and foreign direct and indirect investments.

The Egyptian government must adopt a balanced policy with its local and international partners in the gas market based on a ‘win-win’ concept, taking into consideration the global trends towards cost reduction and based on the following principles:

  • Providing financial and non-financial incentives that attract investment
  • Reliance on long-term partnerships that meet the sustainability objectives of partners
  • Create new business models and forms of partnership
  • Amend the legislation and laws governing the work of the gas market and already the Egyptian government has started in Liberalize Gas Market through the issuance of the gas regulation law in July 2017
  • Stimulate and assist partners in using cost reduction techniques and methods that focus on strategic and tactical objectives and take into consideration the interests of all stakeholders
  • Employing and attracting talents that will help partners achieve their investment goals away from the government complexities and routine
  • Linking the gas strategy to planned national projects such as the Suez Canal Economic Zone project

Adopting a global marketing campaign to attract the big players in the gas market whether, in terms of production, investment or trade with the innovation of non-traditional sources of funding ensures that the burden is not placed on the shoulders of future generations.

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Image courtesy of BP Egypt