By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
DailynewsegyptDailynewsegypt
  • Home
  • Business
    BusinessShow More
    blinx: New digital media hub for Middle East’s youth
    blinx: New digital media hub for Middle East’s youth
    September 24, 2023
    ADNOC Distribution launches first ADNOC service stations in Egypt
    ADNOC Distribution launches first ADNOC service stations in Egypt
    September 24, 2023
    Banks’ financial position grows to EGP 13.798trn in 1H 2023, CBE reports
    Banks’ financial position grows to EGP 13.798trn in 1H 2023, CBE reports
    September 24, 2023
    Shell, KUFPEC partner to explore Egypt's Mediterranean Block 3
    Shell, KUFPEC partner to explore Egypt’s Mediterranean Block 3
    September 24, 2023
    Food Export Council holds symposium on challenges of food exports to EU, US
    Food Export Council holds symposium on challenges of food exports to EU, US
    September 24, 2023
  • Politics
    PoliticsShow More
    Sudanese leader Al-Burhan denounces RSF commander’s letter to UN
    Sudanese leader Al-Burhan denounces RSF commander’s letter to UN
    September 24, 2023
    Egypt, Greece, and Cyprus stress coordination on gas, regional issues
    Egypt, Greece, and Cyprus stress coordination on gas, regional issues
    September 23, 2023
    CCCPA, African Union train officials on ‘Climate Responsive Programming for Sustaining Peace’
    CCCPA, African Union train officials on ‘Climate Responsive Programming for Sustaining Peace’
    September 22, 2023
    Egyptian Health Minister highlights country's interest in local drug manufacturing
    Egyptian Health Minister highlights country’s interest in local drug manufacturing
    September 21, 2023
    Egypt leads meeting to urge global support for Sudan’s humanitarian crisis
    Egypt leads meeting to urge global support for Sudan’s humanitarian crisis
    September 20, 2023
  • Interviews
    InterviewsShow More
    Microsoft Egypt aims to provide advanced AI models, build solid AI ecosystem: Mirna Arif
    Microsoft Egypt aims to provide advanced AI models, build solid AI ecosystem: Mirna Arif
    September 18, 2023
    I love privacy, and I am not concerned about competition: Yasmine Sabry
    I love privacy, and I am not concerned about competition: Yasmine Sabry
    September 14, 2023
    Sustainability, digital transformation at the heart of our strategy: Heidelberg Materials Egypt
    Sustainability, digital transformation at the heart of our strategy: Heidelberg Materials Egypt
    September 12, 2023
    India welcomes Egypt's BRICS membership: Boosting trade, investment, and access to strategic commodities
    India welcomes Egypt’s BRICS membership: Boosting trade, investment, and access to strategic commodities
    September 11, 2023
    The box office is not a measure of success: Basma Hassan
    The box office is not a measure of success: Basma
    September 6, 2023
  • Culture
  • Opinion
  • Sports
  • Lifestyle
Reading: Towards liberating the energy market
Share
Notification
Latest News
blinx: New digital media hub for Middle East’s youth
blinx: New digital media hub for Middle East’s youth
Business
National Cancer Institute, Novartis Egypt host run to raise awareness on World Chronic Myeloid Leukemia Day
National Cancer Institute, Novartis Egypt host run to raise awareness on World Chronic Myeloid Leukemia Day
Culture
ADNOC Distribution launches first ADNOC service stations in Egypt
ADNOC Distribution launches first ADNOC service stations in Egypt
Business
Banks’ financial position grows to EGP 13.798trn in 1H 2023, CBE reports
Banks’ financial position grows to EGP 13.798trn in 1H 2023, CBE reports
Business
Shell, KUFPEC partner to explore Egypt's Mediterranean Block 3
Shell, KUFPEC partner to explore Egypt’s Mediterranean Block 3
Business
Aa
Aa
DailynewsegyptDailynewsegypt
  • Home
  • Business
  • Politics
  • Interviews
  • Culture
  • Opinion
  • Sports
  • Lifestyle
  • Home
  • Business
  • Politics
  • Interviews
  • Culture
  • Opinion
  • Sports
  • Lifestyle
Have an existing account? Sign In
Follow US
  • Advertise
© 2023 DNE News. All Rights Reserved.
Dailynewsegypt > Blog > Opinion > Towards liberating the energy market
Opinion

Towards liberating the energy market

Mohamed El-Bahrawi
Last updated: 2012/11/03 at 7:06 PM
By Mohamed El-Bahrawi 5 Min Read
Share
SHARE

The petroleum ministry is in its final stages of sanctioning the importation of natural gas by the private sector of the hydrocarbon industry. Many questions come to mind as to the consequences of such move, considering the absence of information to clarify the mechanisms by which the government is proposing to implement this policy.

Why is the private sector in need of importing natural gas? Is the government’s capacity to do so no longer sufficient? At what price will the private sector sell its imports to the localmarket? Would it be sold to solely to the private sector or would it be marketed to the government as well? If the energy private sector plans to market its imports to government, who would be gaining here? Who would bare the hefty subsidy bill then?

It’s highly unlikely that gas imported by the private sector would be marketed to the government, simply because the only gain here is for the investor, as the government would be paying more than it does if it imports its own. But looking the country’s current energy needs for large-scale industrial investments, maybe allowing the private sector a piece of energy market is not such a bad idea,

Let’s then look at what the state could gain from such endeavour. For starters, it would relief the government of the burdensome task of providing massive amounts of energy for these kinds of enterprises. The state would profit from the use of the national distribution grid to deliver private gas. On a larger scale the idea fits quite well with restructuring the subsidy programme, as the market’s energy demands from the government would gradually shrink.

A point of contention, however, rises when embarking on this new approach to the Egyptian energy market. Considering utilities have always been in the control of the state, allowing the private sector in would create, for the first time, a dualism in the energy prices in Egypt.

Pricing natural gas is one of the most debated issues in Egypt’s energy market. Considering the advancement in technology that allowed for more efficient exploration and development of natural gas, especially in deepwater frontiers, and the high cost of utilising such technologies, the pricing scheme governing the trade of natural gas has become the primary variable relevant to the investor’s Internal Rate of Recovery (IRR).

Industry professionals greatly differ on the scheme by which natural gas should be priced in the future. Some have suggested that pricing should take place post-discovery, especially in deepwater exploration where the approximate cost is more difficult to calculate given extremely costly nature of such operations.
This proposal, however, instigated fears of overpricing the government’s side, which would be encountered post discovery, at which point the government and the investor would be at odds.

Some have suggested the opposite. Giving an estimate appraisal for the cost of exploration and naming the price pre-discovery. Investors recoiled to such proposition as it presented a vague prospect; investing copious sums of money without having a clear idea of the expected rate of return.

Pricing natural gas is an issue that requires a swift and innovative solution since most of our gas prospects lie in the bed of the deep Mediterranean, where the price of conducting exploration and development stands in stark contrast to those operations done on land or closer to the shore.

Resolving this issue would facilitate the induction of the private sector into the energy market and quell the anxiety surrounding pricing natural gas. The private sector’s entry to the energy market is a progressive step towards liberating the utilities sector from public enterprise. Its introduction, however, is a process that requires not only resolving internal differences of market mechanisms, but a comprehensive strategy that would insure the organic growth of the private sector into not only the energy market, but other sectors where big government is total control.

You Might Also Like

Opinion| US-backed India-Middle East economic corridor: A political project?

Khartoum: the creation and the destruction of a modern African city

Genocide fears in Sudan’s Darfur are attracting little attention − have nations abandoned their responsibility to protect civilians?

Opinion| Rise of new powers and US decline: Challenges and opportunities

Can we get better at predicting earthquakes?

TAGGED: energy, Mohamed El-Bahrawi, natural gas, opinion
Share this Article
Facebook Twitter Email Print
Previous Article The Muslim Brotherhood from within
Next Article Oranges By Hassan Ibrahim Winter sun
1 Comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Ad image
Ad image

Stay Connected

Facebook Like
Twitter Follow
Instagram Follow
Youtube Subscribe

Latest News

blinx: New digital media hub for Middle East’s youth
blinx: New digital media hub for Middle East’s youth
Business
National Cancer Institute, Novartis Egypt host run to raise awareness on World Chronic Myeloid Leukemia Day
National Cancer Institute, Novartis Egypt host run to raise awareness on World Chronic Myeloid Leukemia Day
Culture
ADNOC Distribution launches first ADNOC service stations in Egypt
ADNOC Distribution launches first ADNOC service stations in Egypt
Business
Banks’ financial position grows to EGP 13.798trn in 1H 2023, CBE reports
Banks’ financial position grows to EGP 13.798trn in 1H 2023, CBE reports
Business
//
Egypt’s only independent daily newspaper in English. Discuss the country’s latest with the paper’s reporters, editors, and other readers.

Quick Link

  • Home
  • Business
  • Politics
  • Interviews
  • Culture
  • Opinion
  • Sports
  • Lifestyle

Sign Up for Our Newsletter

Subscribe to our newsletter to get our newest articles instantly!

© 2023 DNE News. All Rights Reserved.

Join Us!

Subscribe to our newsletter and never miss our latest news, podcasts etc..

Zero spam, Unsubscribe at any time.

Removed from reading list

Undo
Welcome Back!

Sign in to your account

Lost your password?