Refining and Petrochemicals:
Egypt's eight refineries are able to process more than 577,000 bbl/d of crude, with the largest refinery being the 145,000-bbl/d Mostorod refinery outside of Cairo. The government has plans to increase production of lighter products, petrochemicals, and higher octane gasoline by expanding and upgrading existing facilities.
In addition, Egypt's Ministry of Petroleum plans to build five new refineries and petrochemical plants valued at $2.5 billion. Egypt's refinery expansion plans include construction of a 40,000 bbl/d hydrocracker at the El-Nasr Petroleum Company refinery in Suez, and a doubling of capacity at the refinery in Assyut to 100,000 bbl/d. In September 1997, a $33 million management contract was awarded to U.K.-based Kvaerner John Brown for the El-Nasr hydrocracker project, which is expected to cost $450 million.
EGPC is planning to increase production of lube oils by expanding its El-Mex refinery in Alexandria. In May 1997, EGPC signed a $300-million contract with Toyo Engineering to build Egypt's first steam cracker.
The cracker, scheduled to be opened in late 1999, is to be fed by ethane and to have a capacity of 300,000 tons per year. In August 1998, Foster Wheeler France SA won a $200-million contract from Alexandria Mineral Oils Co. to build a lube oils plant in Alexandria. Meanwhile, a 700,000-ton-per-year naphtha reformer complex is being built by Alexandria Petroleum Company, with completion due in June 2000.
A contract for construction of the 100,000-bbl/d, Egyptian-Israeli joint venture MIDOR (Middle East Oil Refinery Ltd.) refinery in Alexandria entered into effect in July 1997. The ultra-modern, environmentally-advanced facility is expected to cost about $1.3 billion and will include a 25,000-bbl/d hydrocracker. The original plan was for the facility to be mainly export oriented, with only 20 percent of production sold in Egypt, but recent reports indicate plans for 50 percent or more of the products to be sold locally.
The project represents the largest Arab-Israeli joint venture to date. In January 1997, EGPC acquired an additional 20 percent equity from Israel's Merhav and from the local Hussein K. Salem Group to push its share in the venture to 60%. Each of the private investors retains a 20 percent share in the project. Recent reports indicate that EGPC may intend to sell off some of its holding to foreign investors. Spain's Repsol is set to manage the plant when it comes online in 2001.
Expansions also are being planned for Egypt's petrochemical sector. The Oriental Petrochemicals Company, a local private venture, is planning to build a polypropylene plant in Alexandria that will utilize natural gas from Western Desert fields as feedstock. The plant is expected to cost about $80 million and to produce more than 120,000 metric tons of polypropylene annually.
The Egyptian Petrochemicals Company (EPC), a subsidiary of EGPC, has announced plans for two new petrochemical plants. The first is for an ethylene plant with the capacity to produce 331,000 tons annually. A polyethylene plant with capacity of 220,000 tons also is planned, with the license for the plant having been awarded to BP-Amoco Chemicals.
Oil companies began active exploration for natural gas in Egypt beginning in the early 1990s, and in short order they found a series of significant gas deposits -- in the Nile Delta and the Western Desert. Today, Egypt's natural gas sector is expanding rapidly, with production expected to nearly double between 1999 and 2002. Production stands at 2.3 billion cubic feet per day (Bcf/d) near the end of 1999, up from 1.6 Bcf/d at the beginning of the year, and is expected to reach 3.0 Bcf/d y the end of 2002 and 4.0 Bcf/d in 2003.
Major foreign companies involved in gas exploration and production in Egypt include British Gas (BG), BP-Amoco, ENI-Agip, and Shell. Shell has plans to spend around $1.6 billion in Egypt, mainly on gas exploration and development, over the next five years. BP-Amoco plans to spend $450 million by 2000, while ENI-Agip and BG also plan significant expenditures in this area.
As of early 1999, Egypt's total proven gas reserves were estimated at 31.5 trillion cubic feet (Tcf), up 54 percent from 20.4 Tcf in 1997, and more than double the 15 Tcf of proven reserves in 1993. Reserves are expected to increase even more in the next few years. Most of this increase has come about as a result of new gas discoveries in the Mediterranean offshore/Nile Delta region, and increasingly in the Western Desert.
In the Nile Delta, which has emerged as a world-class gas basin, recent offshore field developments include Port Fuad, South Temsah, and Wakah. In the Western Desert, the Obeiyed Field is an important natural gas area currently under development. Overall, more than half of Egypt's current natural gas production comes from just two fields: Abu Madi (on stream since the 1970s) and Badreddin (since 1990). Abu Qir is the third largest field, and like Abu Madi is considered mature.
The International Egyptian Oil Company (IEOC), a subsidiary of Italy's ENI-Agip group, is Egypt's leading natural gas (and overall hydrocarbons) producer, operating in the Gulf of Suez, the Nile Delta, and the Western Desert regions. In cooperation with BP-Amoco, IEOC has been concentrating its natural gas exploration and development efforts in the Nile Delta region.
The companies are undertaking a $1 billion development program expected to yield about 365 billion cubic feet (Bcf) annually beginning in 2000. On November 4, 1997, Amoco (along with its partners EGPC and IEOC) announced plans to develop the giant Ha'py gas field in the Ras el-Barr concession of the Nile Delta region at an estimated cost of $248 million.
The gas (up to 2 Tcf annually) is to be marketed domestically beginning in 2000. In September 1997, IEOC tested the Temsah gas field (located in the offshore Nile Delta) at 11.6 million cubic feet per day (Mmcf/d). In October 1998, BP-Amoco (25 percent owner) and ENI-Agip signed a gas sales agreement with EGPC (50 percent owner) and IEOC (25 percent owner) for Temsah. Field development could cost $700 million, with production beginning in early 2000. Temsah's gas reserves are estimated at 3.9 Tcf, and the gas sales agreement is for 35 Mmcf/d initially, increasing to 480 Mmcf/d by 2003.
Two areas in the Western Desert -- Obeiyed and Khalda -- have shown great potential for increasing Egypt's gas production in the near future. The Obeiyed gas recently started producing 300 Mmcf/d, after the completion of a pipeline linking it to Alexandria. Production of 300 Mmcf/d started at Khalda.
In late 1998, Repsol announced a gas discovery in the Khalda Offset Concession, adjacent to Khalda. Output from Obeiyed and Khalda will be transported to Alexandria by a 180-mile pipeline. BP-Amoco and the IEOC also are preparing to bring several fields off the Nile Delta coast into production. These include the Baltim and Baltim South fields, expected to come online by 2000, and fields on the Temsah and Ras el-Barr concessions by 2003.
Other companies with recent gas finds in Egypt include: Petrobel (the Sigan-1 field), Agip/EGPC (Wakkar), and the U.K.-based BG Group (Rosetta-5 and Rosetta-6). These 3 finds are all in the Nile Delta region. Gas deliveries from the Rosetta concession are expected beginning in 2000.
In other developments, BP-Amoco has found significant gas reserves in its North Sinai concession, while Apache is expecting its natural gas output in Egypt to grow five-fold between 1997 and 2000, reaching nearly 15 Bcf per year. In April 1999, German RWG-DEA hit gas in its concession in the western Nile Delta, with a flow rate of 30 Mmcf/d. In May 1999, the Italian firm Edison and British Gas International made a large find ("P12/13") in the West Delta Deep Marine concession, which tested at 45 Mmcf/d, followed by another ("Simian-1") which tested at 44 Mmcf/d in October 1999.
Geologists believe that the same type of formations which have been found to hold gas in the Nile Delta also extend out into the Mediterranean as a result of the Nile's flow.
The rapid increase in Egypt's natural gas reserves and production in recent years has encouraged ambitious plans for gas exports (either by pipeline or LNG tanker) to such countries as Turkey, Israel, Jordan, Libya, and the Palestinian territories. Currently, Egypt consumes all the gas it produces.
The most ambitious idea for gas exports is a pipeline which would connect Egypt with Israel and Gaza, with the possibility of eventual links to Lebanon, Syria and Turkey. On December 22, 1999, agreement was announced by the office of Israeli Prime Minister Ehud Barak on gas exports from Egypt to Israel and Gaza.
A pipeline is to be extended from El-Arish in Sinai to consumers in Israel and Gaza, initially gas-fired power plants along the coast. Construction is due to be completed by early 2002.
Besides the Egypt-Israel-Gaza pipeline, another option for Egypt is to export LNG to Turkey. This project would involve the construction of a $1.2-billion liquefaction terminal near Port Said on the Mediterranean coast, and a regasification facility at Izmir in Turkey.
Egypt and Turkey signed a preliminary agreement for LNG exports in 1996, and BG in November 1999 formed a subsidiary called Egypt LNG for the venture, but analysts have raised serious questions about whether the project is economically feasible.
Natural gas demand is growing rapidly in Egypt as thermal power plants, which account for about 65 percent of Egypt's total gas consumption, switch from oil to gas. Gas also is being targeted for use in heavy industrial projects, including petrochemical plants, a large new fertilizer plant in Suez, and several major new steel projects in Alexandria, Suez, and south of Aswan.
Compressed Natural Gas (CNG) is being used as fuel for taxis in the Cairo metropolitan area as part of a pilot project. Around 20,000 taxis already have been converted to use CNG, and 17 CNG filling stations have been built to serve them. Meanwhile, domestic gas consumers are to be served by several private gas distributors, franchises which were awarded in late 1998.
One of the franchises, awarded to a team headed by BG and including the Egyptian construction firm Orascom and Edison of Italy, will develop a gas distribution infrastructure in Upper Egypt as far south as Asyut, where no piped gas had been available. After the initial phase, valued at $220 million, a possible later phase may extend the gas grid south to Aswan.
Egypt currently has installed generating capacity of 16.6 gigawatts (GW), with plans to add 9.3 additional GW (mainly gas-fired) by 2010. Around 84 percent of Egypt's electric generating capacity is thermal (gas turbines), with the remaining 16 percent hydroelectric, mostly from the Aswan High Dam. All oil-fired plants have been converted to run on natural gas in a recently completed program.
Plans for additional capacity include a 1.2 GW gas-fired power plant at Kureimat, about 60 miles east of Cairo, scheduled to enter service in the near future. The Kureimat plant received $200 million in financing from the United States Agency for International Development.
With electricity demand growing 7 percent -8 percent annually, Egypt is building several power plants and is considering limited privatization of the electric power sector. Egypt's power sector is currently comprised of seven regional state-owned power production and distribution companies. The government plans to privatize them, starting by selling off minority stakes to private investors through the Cairo Stock Exchange.
A 20 percent stake in Cairo Electricity Company was sold off by the end of August 1999, and minority stakes in the six others are to be sold by the end of 1999. This decision follows the February 1998 passage of Law 18, which provides for electricity restructuring and asset sales. The aims of privatization are to raise money and to attract new investment.
Egypt is planning to add generating capacity by utilizing Build, Own, Operate, and Transfer (BOOT) financing schemes to construct power plants. BOOT projects are used to fund large-scale public infrastructure without affecting the country's debt profile. Private developers are allowed to recover their costs of construction through ownership and operation of the plant for a fixed period before handing it over to the state.
The first BOOT project is a gas-fired steam power plant with two 325-MW generating units, to be located at Sidi Kerir or on the Gulf of Suez. The plant is expected to cost about $450 million, to begin operation in 2001, and to be the largest private power generator in the Middle East. Electricity from the plant is to be sold at 2.54 cents per kilowatthour.
This competitive price stems largely from the availability of cheap natural gas -- to be supplied by Egypt's Gasco -- as a feedstock. U.S.-based InterGen (a joint venture of Bechtel Enterprises and Shell Generating Ltd.), along with local partners Kato Investment and First Arabian Development and Investment, have the 20-year BOOT contract for Sidi Kerir. The second BOOT power project award went to Electricite de France (EDF), for two gas-fired plants to be located near the north and south ends of the Suez Canal. Each plant will have an installed capacity of 650 MW, and the project cost will total around $900 million.
The price for power from the EDF plants will be 2.4 cents per Kilowatt hour (Kwh), the lowest price yet offered for a BOOT plant. The Egyptian Electricity Authority issued a tender for two additional BOOT projects, Cairo North and Safaga, in October 1999.
Work is continuing on the linkage of Egypt's electricity network with other countries in the region, including a $239-million link with Jordan which was completed in October 1998. The first phase of a Five-Country interconnection of Egypt's system with those of Jordan, Syria, Turkey, and Iraq is scheduled to be completed by 2002. Egypt also activated a link to Libya's electric grid in December 1999.
Coal production started in 1995 at the El-Maghara mine on the Sinai Peninsula. Overall, Egypt has an estimated 23 million short tons (Mmst) of recoverable reserves in the mine and an additional 17 Mmst in an extension west of the current facility.
The mine is expected to be at its full production capacity of 0.7 Mmst by 1999. The government is planning to invest $59 million to expand the port of El-Arish to handle exports from the mine. The mine currently exports coal to Turkey, and plans to supply coal to power plants and a cement factory to be built in Sinai.
Energy Ministers: Sameh Fahmy (Minister of Petroleum), Ali el-Saidi (Minister of Electricity and Energy)
Proven Oil Reserves (1/1/99E): 3.5 billion barrels
Oil Production (1st 9 months of 1999, average): 910,000 barrels per day (bbl/d), of which 834,000 bbl/d is crude oil
Oil Production Capacity (1999E): 928,000 bbl/d
Oil Consumption (1998E): 550,000 bbl/d
Net Oil Exports (1998E): 360,000 bbl/d
Crude Refining Capacity (1/1/99E): 578,000 bbl/d
Natural Gas Reserves (1/1/99E): 31.5 trillion cubic feet (Tcf)
Natural Gas Production (1998E): 0.5 Tcf
Natural Gas Consumption (1998E): 0.5 Tcf
Recoverable Coal Reserves (12/31/96E): 24 million short tons (Mmst)
Coal Production (1997E): 0.4 Mmst
Coal Consumption (1997E): 1.7 Mmst
Electric Generation Capacity (1/1/97E): 16.6 gigawatts (84 percent thermal, 16 percent hydroelectric)
Electricity Generation (1998E): 57.8 billion kilowatthours
Minister of Environment Affairs:Nadia Riad Makram Ebeid
Total Energy Consumption (1998E): 1.9 quadrillion Btu* (0.5 percent of world total energy consumption)
Energy-Related Carbon Emissions (1998E): 31.6 million metric tons of carbon (0.5 percent of world carbon emissions)
Per Capita Energy Consumption (1998E): 29.4 million Btu (vs U.S. value of 350.7 million Btu)
Per Capita Carbon Emissions (1998E): 0.5 metric tons of carbon (vs U.S. value of 5.5 metric tons of carbon)
Energy Intensity (1998E): 31,000 Btu/ $1990 (vs U.S. value of 13,400 Btu/ $1990)**
Carbon Intensity (1998E): 0.53 metric tons of carbon/thousand $1990 (vs U.S. value of 0.21 metric tons/thousand $1990)**
Sectoral Share of Energy Consumption (1997E): Industrial (53.6 percent), Transportation (24.7 percent), Residential (22.1 percent)
Sectoral Share of Carbon Emissions (1998E): Industrial (55.0 percent), Residential (23.4 percent), Transportation (21.6 percent)
Fuel Share of Energy Consumption (1998E): Oil (63.3%), Natural Gas (27.6%), Coal (2.2%)
Fuel Share of Carbon Emissions (1998E): Oil (72.0 percent), Natural Gas (25.0 percent), Coal (3.0 percent)
Renewable Energy Consumption (1997E): 176 trillion Btu* (10 percent increase from 1996)
Number of People per Motor Vehicle (1997): 33 (vs U.S. value of 1.3)
Status in Climate Change Negotiations: Non-Annex I country under the United Nations Framework Convention on Climate Change (ratified December 5th, 1994). Signatory to the Kyoto Protocol (signed March 3, 1999- not yet ratified).
Major Environmental Issues: Agricultural land being lost to urbanization and windblown sands; increasing soil salinization below Aswan High Dam; desertification; oil pollution threatening coral reefs, beaches, and marine habitats; other water pollution from agricultural pesticides, raw sewage, and industrial effluents; very limited natural fresh water resources away from the Nile which is the only perennial water source; rapid growth in population overstraining natural resources
Major International Environmental Agreements: A party to Conventions on Biodiversity, Climate Change, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands and Whaling.
* The total energy consumption statistic includes petroleum, dry natural gas, coal, net hydro, nuclear, geothermal, solar and wind electric power. The renewable energy consumption statistic is based on International Energy Agency (IEA) data and includes hydropower, solar, wind, tide, geothermal, solid biomass and animal products, biomass gas and liquids, industrial and municipal wastes. Sectoral shares of energy consumption and carbon emissions are also based on IEA data.
**GDP based on EIA International Energy Annual 1998
OIL and GAS INDUSTRIES
State Oil Company: Egyptian General Petroleum Corporation (EGPC) plus 11 smaller state oil companies
State Pipeline Companies: Sumed-Arab Petroleum Pipeline Company (APP), Domestic pipelines-Petroleum Pipelines Company (PPC), Export gas pipelines-Egypt Trans-Gas Company (EGTC)
Major Foreign Oil Company Involvement: Apache, British Gas, BP-Amoco, Deminex, TotalFina-Elf, ENI-Agip, Exxon-Mobil, Marathon, Norsk Hydro, Novus, Repsol, Royal Dutch Shell, Samsung, Texaco
Major Ports: Alexandria, Port Said, Sidi Kerir, Ras Shukheir, Suez, Ain Sukhna
Major Oil Fields: Belayim Marine, October, Morgan, Belayim, Badri, Ras Budran
Major Gas Fields: Abu Madi, Abu Qir/North Abu Qir, Shukheir, Badreddin
Major Pipelines (capacity): Sumed pipeline (2.5 million bbl/d)
Major Oil Refineries (crude oil capacity): Cairo Petroleum Refining Company -- Mostorod (145,000 bbl/d), Tanta (35,000 bbl/d); El-Nasr Petroleum Company - Suez (99,300 bbl/d), Wadi Feran (7,060 bbl/d); Alexandria Petroleum Company - El Mex (100,000 bbl/d); Ameriya Petroleum Refining Co. (78,000 bbl/d); Suez Oil Processing Company - Suez (66,400 bbl/d); Assiut Petroleum Refining Co. (47,000 bbl/d)
Source:United States Energy Information Administration.
© 2000 Mena Report (www.menareport.com)