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Al-Ahram Weekly 2 - 8 March 2000 Issue No. 471 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 2 - 8 March 2000 Issue No. 471
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Interview Features Focus Heritage Travel Living Sports Profile People Time Out Chronicles Cartoons Letters And it was a gas
By Niveen Wahish
For three years now, the government has appeared keen to stress the firmness of its intention to turn the country's natural gas reserves into an export-earner. Exporting natural gas, so the oft-repeated mantra runs, will play an important part in correcting balance of trade deficits. Yet much remains to be done before this optimistic scenario becomes a reality.
Customers are not exactly breaking down the door, and marketing remains an urgent priority. And for the customer to actually receive the gas, facilities for its liquefying will need to be constructed if it is to be shipped, or pipelines constructed if it is to be transported in its natural form. Neither of these are going to be built overnight.
The possibility of exporting natural gas received its first serious airing in 1996, during the Middle East and North Africa (MENA) Conference. Then the Egyptian government signed a memorandum of understanding with Turkey to export natural gas. But nothing materialised. Recently, however, there have been attempts to revive the memorandum. An Egyptian delegation, headed by Minister of Petroleum Sameh Fahmi, signed a protocol during a visit to Turkey last month to tender for a contract to supply Turkey with eight billion cubic metres of natural gas. Half of this quantity will be supplied in liquid form and Egypt will be competing with Yemen, Algeria, Nigeria and Qatar. Bids from the five countries are expected to be complete by mid-summer. British Gas (BG) International and BP Amoco are expected to be the Egyptian government's main partners in the deal should Egypt win the bid.
The remaining four billion cubic metres, according to the protocol, are theoretically to be transmitted via a pipeline extending from Al-Arish to the southeastern Turkish oil terminal of Ceyhan. But the pipeline may be a tougher deal to cut. Egypt will be facing competition from former Soviet states, many of which enjoy cost advantages in terms of delivery.
Plans to export to Turkey, though, are hopefully only the beginning, as a concerted marketing drive gets in gear, targeting those countries in the Mediterranean basin that are already net energy importers.
The latest protocol has revived hopes that a liquification plant -- a joint-venture between the Egyptian General Petroleum Corporation (EGPC), Agip (Italy) and BP Amoco -- will finally be constructed, though work on the plant will take a minimum of three years.
SOURCE: Prime Securities
As far as a pipeline to transport natural gas is concerned, it remains unclear whether or not the pipeline will cross Israel, or whether Israel will be provided with facilities to itself purchase gas. The "peace pipeline" suggested during the MENA Conference by the Italian company Agip was originally envisaged as a link between Egypt, Palestine and Israel and later Syria, Lebanon and Turkey. And though foreign companies with concessions in Egypt have the right to export from their quotas without restriction, Agip has said that it has not, as yet, reached any agreement with Israel for the export of gas. And such a decision, said a company official, must pend on being given a political green light.
Meanwhile, reports have appeared suggesting that the Israeli government is postponing any outsourcing of gas supply until local energy exploration companies have more fully explored the possibility of utilising natural gas reserves off Israel's Mediterranean coast.
Current concessions, in force since 1985, oblige the Egyptian government to purchase the full output of gas produced by foreign companies. The terms of the concessions were formulated to encourage exploration and then the development of new gas fields, but are likely now to be changed to be given a more export friendly gloss. Recent surveys have placed Egypt's natural gas reserves at 42 trillion cubic feet (tcf), though some estimate that the final figure for economically viable gas could be as high as 100 tcf.
"In the past five years foreign companies have come to realise that the Mediterranean is a world class gas basin," said David Nagel, general manager of BP-Amoco Egypt, adding that Egypt's reserves will not only be enough for this generation, but will also "cover the needs of grandchildren" as well as exports.
