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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 11 - 17 March 1999 Issue No. 420
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Special Features Travel Sports People Time Out Chronicles Cartoons Letters Fueling the desert
By Rushdi Said *
Enormous quantities of natural gas have recently been discovered in the Delta and the adjacent coastal strip, giving Egypt a huge surplus exceeding its current energy requirements. I think that this surplus should be utilised in developing Egyptian industry, rather than exporting it to the east Mediterranean countries.
Not that there do not exist certain pressures militating for export. The eastern Mediterranean countries in question are in dire need of energy for their planned economic expansions and their intention to switch to the use of gas rather than liquid or fossil fuels. Moreover, the foreign companies which discovered the new fields are pressing for the exportation of the surplus, or at least the portion of production that goes to them under the terms of the contracts they concluded with the Egyptian government.
These contracts are governed by the law for petroleum exploration, which was amended to stimulate more intensive gas exploration. The amendment, in conjunction with the conditions drawn up by the Egyptian Petroleum Organisation in its contracts with the foreign companies, galvanised these companies into action. The speed and efficiency which these companies brought to the task added more than 20 trillion (20,000 billion) cubic metres to Egypt's natural gas reserves in the space of four years.
The American oil company Amoco and the AGIP, an affiliate of the Italian oil company Eni, which had been granted most of the drilling concessions, scored an unprecedented 95 per cent success rate in their explorations. Twenty new fields were discovered in 1996, alone. And it is anticipated that Egypt's natural gas reserves will increase from 36 trillion to 65 trillion cubic metres over the next five years, a figure that does not even take into account the enormous potential of deep water exploration in the Mediterranean.
In the past, prior to these discoveries, the Egyptian government would purchase the quota of the companies for local consumption. This is no longer possible now that supply exceeds current domestic demand. That is why the producing companies want to export and are desperate to do so quickly because, within the next few years, the market for Egyptian gas will be threatened by competition from the large discoveries of natural gas fields in Russia, Turkmenistan, Qatar, Iran and Libya.
Amoco has a project to export Egyptian gas via an underwater pipeline from a natural gas depot on the northern Egyptian coast to Izmir. From that Turkish port, underwater pipelines will transport between 125 to 200 billion cubic metres of gas per year to Israel and Lebanon, a quantity that, nevertheless, falls short of these countries' energy needs. Israel, for example, has an annual deficit of some 220 billion cubic metres while both Lebanon and Turkey have ambitious development plans that will require, respectively, 70 billion and 400 billion cubic metres of gas per year, beginning in 2010.
Another project is currently being discussed with Amman to transport 400 billion cubic meters of gas per year across Sinai to Jordan.
However, by exporting gas, Egypt will forfeit one of the best opportunities it has ever had to develop its economy and raise its standards of living. Energy is a fundamental ingredient for economic expansion. Exporting energy resources should not be one of our priorities. There is ample room to augment the domestic use of gas. Gas consumption in Egypt is far less than that of other countries, even neighboring ones.
Egypt presently consumes 1.6 billion cubic metres of gas per day, primarily in generating electricity and, to a lesser extent, in the operation of cement, fertiliser and sugar plants. The next five-year development plan only projects a 75 per cent increase in the use of gas, again, primarily to convert more electricity generating plants from liquid fuel to gas.
There is also a plan to double the use of gas by 2010 by extending the currently 3,000-kilometre-long pipeline network up to Aswan, making it possible to pipe approximately 1,500 billion cubic metres of gas per year to Upper Egypt.
Nevertheless, in spite of the rapid rise of petroleum consumption in Egypt, from 17 million tons in 1982 to 22 million tons in 1995, the average per capita consumption of fuel in Egypt is still low. Standing at 550 kilogrammes per year, this is a fifth of the per capita level of petroleum consumption in Israel and Italy and 60 per cent of that in Turkey. Also, the per capita quantity of electricity consumption in Egypt is 910 kilowatt hours, 15 per cent and 70 per cent of the per capita electricity consumption in Israel and Turkey, respectively.
Egypt, thus, has some way to go before it can capitalise on the immense energy resources discovered recently in order to raise the living standards of its population.
Egypt is being exhorted by the world to normalise relations with Israel. However, any permanent normal relations will remain impossible until Egypt has developed at least nearly as strong an economy as Israel's, thereby dispelling fears of possible Israeli domination over the Egyptian economy. The only way to achieve economic parity with Israel, and to give hope to the millions of Egyptians who will enter the labour market in the next 10 years, is to invest the production of the new natural gas fields in modernising and expanding Egypt's industrial and urban infrastructure.
Egypt is a densely populated country, with its inhabitants concentrated in the narrow strip of the Nile valley. Over the next 20 years, this population will increase by another 20 million. If we are to reduce this overcrowding, a significant percentage of the population and their activities will have to be relocated outside of the Nile Valley. Towards this end, the new sources of energy will be the cornerstone for the construction of new urban communities in the desert.
Urban expansion into the desert, I believe, is Egypt's only realistic alternative if it is to absorb the anticipated population increases. The current trend to expand agricultural production into the desert does not significantly contribute to alleviating population density. Moreover, it is not the optimum way to use our limited water resources, and the returns on investment in desert agriculture are relatively low.
In 1997 I proposed resettling non-agrarian workers in new urban settlements in the desert and transforming the Nile Valley and the Delta into a natural preserve for advanced agriculture.
The venture, in brief, involves developing an area of the desert in close proximity to sources of natural gas. Water would be supplied to the area through a pipeline extending from the Nile and a modern transportation and communications network would link it to the Nile Valley. To my mind, the area in the northwestern desert extending from Siwa Oasis along the Qantara depression to the Mediterranean coast in the north would be the most advantageous location for such a project. It has a relatively moderate climate, the land is relatively flat and it is located near sources of energy and already existing urban centres. Even if half of this 40,000-square-kilometre area were to be kept as a natural preserve, it would absorb all the factories currently existing in the Nile Valley, with plenty of room left for a similar number of new factories. It would also easily accommodate the families of the millions of workers in these industries along with the millions of families of those engaged in the various complementary and support activities.
Certainly, the approximately 100 cubic metres of water per person that would have to be supplied via pipeline to the area would bring a far greater return on the investment than the amounts of water that are feeding land reclamation projects today.
It will save the enormous costs and energies involved in digging kilometres of irrigation canals through rock and salt fields in the attempt to reclaim very thirsty land with a low potential for agricultural yield. The money that would be saved from these efforts, along with the savings of Egyptians eager for new, healthy and appropriate housing, and the investments furnished by banks and entrepreneurs inspired by the vision of properly planned industrial development could become the initial catalyst sparking the development of this national enterprise that would restore vigour to Egyptian economic life.
* The writer is former head of the National Geological and Surveying Authority.
