By Mohamed Adel
The interim government agreed cement companies could import coal in order to avoid a gas production crisis in 2018.
The Ministry of Petroleum expects the natural gas deficit to become worse, hitting 2.4bn cubic feet per day during the 2017/2018 fiscal year, not including the needs of new power plants, which are estimated at 1.2bn cubic feet. This contradicts government statements that the crisis would end during this period, according to a Ministry of Petroleum memorandum obtained by Daily News Egypt that describes the government’s plan for natural gas production.
Egypt’s foreign partners have decelerated research and development in oil and gas after the economically ailing country failed to pay their fees, which amounted to $6bn at the end of April, according to the memorandum. As a result, the Ministry wrote, “Egypt will face a crisis in providing gas to all sectors in the coming period, with daily imports at approximately 500m cubic feet starting in 2015.” according to the document.
The deficit will deteriorate next year to 846m cubic feet of gas per day, compared to its current 746 million. While Egypt will produce an average of 5.03bn cubic feet of gas, consumption will increase to 6.4bn cubic feet, compared to only 5.9bn cubic feet in the fiscal year 2013/2014.
“Inevitably, production rates will continue to decline until 2018, to reach 4.8bn cubic feet of gas per day, and consumption rates will drop to 7.7bn cubic feet,” the document stated.
This comes despite an announcement from the Ministry of Petroleum about a new British Petroleum project north of Alexandria. The project would partially begin in 2016, and full production is expected in 2017 at 900m cubic feet per day, which would be a solution to the gas production problem in Egypt.
The Ministry of Petroleum brought this information to the prime minister in order to highlight the importance of developing gas production for Egypt’s future. Essentially, the government was forced to allow cement companies to use coal in order to cover a portion of the gas consumption, thereby reducing the deficitand mitigating the energy demands of power plants, according to an official, since power plants will need around 80% of Egyptian gas production through the 2017/2018 fiscal year.
The state budget would not be able to afford importing more than 500m cubic feet of gas per day, so the oil sector would bear the financial burden, given the inability of the Ministry of Finance to manage liquidity, according to the official.