Market controlled by expansion in gas imports: Ministry of Petroleum

Mohamed Adel
5 Min Read

Right after President Abdel Fattah Al-Sisi took the office of president, the Ministry of Petroleum started implementing measures to provide fuel needs to the domestic market through contracts on gasification ships to receive Liquid Natural Gas (LNG) shipments.

Ain Sokhna port was equipped to receive LNG and was linked to the national gas grid. The first gasification vessel resumed operations in April 2015, with a capacity of 500m cubic feet per day. The second vessel joined that September, producing 750m cubic feet per day.

The ministry signed a contract to build a third pier, in preparation for inaugurating a third vessel in the second quarter of 2017, bringing the total import capacity to about 2bn cubic feet per day.

Gas imports were lifted from 850m cubic feet per day to 1.1bn cubic feet per day, so as not to cut off gas to the industrial sector in light of rising electricity consumption.

The Egyptian Natural Gas Holding Company (EGAS) contracted to import 80 LNG shipments for $2.5-3bn in 2016. The shipments are used to provide the gas needs of both the industrial sector and power plants.

The agreement importing the new vessel was signed after the tender put forward by EGAS that included shipments from Algeria’s Sonatrach, Russia’s Gazprom, and the Swiss Vitol Swiss, as well as a number of global gas companies.

Next to securing the market need of gas, the Ministry of Petroleum contracted with Arab countries to supply shipments of petroleum products with facilities in payment to reduce the pressure on the state budget.

The ministry, for instance, contracted with Kuwait Petroleum Corporation to supply 3m barrels of crude oil per month, as well as shipments of diesel and jet fuel worth $1.2bn annually.

Kuwait used to supply 2m barrels of crude oil a month to Egypt. These shipments enjoyed financial facilities, including a nine-month grace period for payment.

The contract for the supply of crude oil shipments ends in September.

Egypt also imports crude oil from Kuwait according to the Brent price at the time of supply.

If the volume of imported crude oil exceeds the need of the domestic market, the surplus is refined and sold on international markets or stored in Egypt.

Minister of International Cooperation Sahar Nasr and Minister of Petroleum Tarek El-Molla signed an agreement with the Saudi Fund for Development in early June allowing Egyptian General Petroleum Corporation and the Saudi Aramco to import petroleum products for five years.


Last month, the Ministry of Petroleum submitted a plan to the president. The plan included 12 gas projects to add 5.5bn cubic feet per day and 20,000 barrels of condensates by the end of 2019.

The plan also stated that the Atoll field development will be completed by December 2018 to produce 300m cubic feet of gas per day. The project is worth $3.8bn.

Moreover, Zohr field is expected to be linked to the national network by 2019 and to add 2.7bn cubic feet of gas per day. The project is valued at $15.6bn. Also in the Mediterranean, wells of the third phase of Ras El Bar project will add 110m cubic feet at the end of May.

The Zohr reserves are estimated at 30tr cubic feet of gas and 19m barrels of condensates. Early production is expected to begin in December 2017 at a rate of 1bn cubic feet per day and will increase gradually to 2.7bn feet in 2018/2019.

The project’s investments are estimated at $12bn and are expected to amount to $16bn over the project’s duration. So far, three wells have been drilled while a fourth one is underway. The first phase is a total of six wells.

The ministries noted the need to speed up production of the North Alexandria project to begin in the third quarter of 2017. The project was halted in 2011 following the political turmoil that followed the 25 January Revolution.

The plan also included completing Noras field and lifting its production to 700m cubic feet of gas per day by June 2018.

The government has taken measures to rationalise fuel subsidies. Prices of petroleum products were increased in the local market so as to reduce costs in light of declining state revenues.


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