CAIRO: Petroleum Minister Abdulla Ghorab said priorities in the coming period will be to set a stable background for increasing hydrocarbon output, providing the required petroleum products and gas supplies to the local market, as well as protecting Egypt’s oil and gas wealth, reported the state-run Al-Ahram.
Cairo-based investment bank Beltone Financial, citing the Al-Ahram report, said that the petroleum ministry is committed to agreements with international oil companies.
Ghorab added that a new mechanism to revise Egyptian gas export prices will be enacted to ensure the maximum return to Egypt, the newspaper reported.
In related news, Egypt’s new Prime Minister Essam Sharaf met with Jordan’s Minister of Trade and Industry to discuss mutual cooperation as well as the resumption of pumping natural gas to Jordan after repairs are completed on the pipeline that was attacked on Feb. 5 in northern Sinai.
Egypt supplies Jordan with about 80 percent of the Kingdom’s electricity needs.
Noran Abdel Rahman, a petroleum expert at investment bank CI Capital, said there are two ways to increase local supply of natural gas: increase exploration and decrease exports.
“The problem might be that we have already signed agreements that may hinder our ability to meet local demand,” she said.
Since there is an import-export deficit, Egypt must rely on containing demand and not supply as supply is out of the government’s hands due to declining reserves, Abdel Rahman said, adding that this would require a long-term plan to decrease energy subsidies, in turn eventually decreasing domestic consumption of petroleum products.
AFP quoted a Jordanian official saying that Egypt would only resume supplies only if Amman signs an agreement on new rates.
According to AFP, the official said that Egypt used to sell gas to Jordan at a discounted price half of the market price, or $3 per million British Thermal Unit (BTU).
Previously, the decision to export natural gas at discounted prices caused public outcry, particularly the perception that it is exported to Israel at low prices over long periods.
For Abdel Rahman the main problem is that the government used to agree on a price that was not disclosed, and the contracts would be signed for extended periods without established mechanisms to re-evaluate prices based on international price.
“What we need is more transparency and a mechanism like what the minister is proposing. People think of corruption and scandal regarding the prices, simply because they are not disclosed,” she said.
Ghorab was previously chief executive of the state-owned Egyptian General Petroleum Corporation (EGPC), a holding company that owns 12 companies and has stakes with foreign partners in another 58, Reuters reported.
“The petroleum sector is tied to oil agreements and foreign partners, and we hope that cooperation will continue and we can fulfill all of our commitments,” the state-run news agency MENA quoted him as saying.
Egypt had proven reserves of oil and gas of 18.3 billion barrels equivalent as of June 2010, Reuters reported.