The looming danger
Amr Kamal Hamouda* is pessimistic about prospects for power supplies
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Egypt hopes to produce 20 per cent of its electricity needs from renewable energy by 2020
The energy sector in Egypt faces numerous and serious challenges that it will have to deal with during the coming years. Crude oil and natural gas production levels are insufficient to meet domestic consumption which has increased over the period 1975-2006 from 7.5 million tonnes to 52 million tonnes, at an average annual growth rate of 6.5 per cent. Moreover, the rate of electricity consumption is increasing at the rate of 6.72 per cent per year.
The gravity of the situation lies in that the components of the "power mixture" in Egypt have been determined by the Higher Council for Energy as follows: 67.6 per cent crude oil and gas; 9.6 per cent nuclear energy; three per cent hydropower; 4.2 per cent biomass; 11.1 per cent wind power; 4.4 per cent solar energy.
It is clear that the largest component is crude oil and natural gas. According to the estimates of the Ministry of Petroleum, total domestic needs for oil and gas during 2006-2020 will be 1,100 million tonnes while reserves will total 2,150 million tonnes. Egypt's share of these is only half the amount, since the other half goes to foreign partners. This means that the reserves will be exhausted by 2020 bearing in mind that crude oil and natural gas are depletable resources.
The oil expert Hussein Abdallah estimates that domestic crude oil and gas consumption would have risen from 52 million tonnes in 2006 to 103 million tonnes in 2020 and that oil prices will rise from $70 per bbl to $90 or $100 per bbl.
Egypt has currently turned to importing oil and gas (where it purchases the share of the foreign partner). This means that the "oil bill" will not be less than $65 billion per year. Abdallah poses a question -- which we as well raise: "how will we be able to raise this amount of money and what will happen if the needed energy is not provided?"
Actually, natural gas was supposed to replace fuel oil in supplying electric power plants, given that it is environmentally safer and is capable of speeding up the operation process in the plants. However, the increased trend in exporting natural gas has actually led to an increase in fuel oil consumption, rising from 1.2 million tonnes in 2003/ 2004 to 4.4 million tonnes in 2007/2008.
Moreover, proven natural gas reserves -- in our opinion and that of other independent oil analysts -- will not exceed 33 trillion cubic feet of natural gas by 2022, assuming an economic growth rate of four per cent. However, if the growth rate rises to seven per cent then the demand for gas will reach 56 trillion cubic feet.
Furthermore, the export price for each million Btu of gas is $3 while the equivalent amount of fuel oil imported is for $15.
With respect to crude oil, there has been a large decline in production rates. After reaching a peak of 950,000 bbl per day, production rates fell to 500,000 bbl per day. The Ministry of Petroleum currently imports large quantities of crude oil from Kuwait to cover the gap in requirements.
Because of this, we have adopted a critical stance regarding the "power mixture" that is based largely on "fossil fuels" (crude oil, natural gas and coal) at 67.6 per cent. This mixture has to be reconsidered and the other components developed as we will demonstrate in what follows.
Regarding nuclear energy, Egypt was one of the first developing countries to acknowledge the capabilities of nuclear energy in supporting sustained development through the provision of electricity needs and the desalination of sea water. Both India and Egypt began their nuclear programmes at the same time. Egypt, however, halted its programme while India succeeded in establishing 10 nuclear power plants. The state adopted a wise decision in 2007 to launch a nuclear programme and establish four plants with the possibility of increasing this number to eight plants. The decision was taken based on concerns regarding the depletion of both gas and crude oil resources and the importance of diversifying sources of energy in Egypt, an issue closely linked to national security. This is an issue that cannot be postponed because, despite the importance of other energy sources such as solar energy or wind energy for example, the size of nuclear energy is more effective. There should be no further delay in launching the tendering process for the construction of the four plants, especially that each plant will take between eight to 10 years to be completed.
Al-Dabaa in the Northern Coast is an ideal location for the construction of the first nuclear power plant. However, it appears that a number of businessmen with interests in the tourism sector have been leading a campaign to scrap the construction of a nuclear power plant in this location with the pretext that this will jeopardise tourism in the area. However, the interests of a particular group should not dictate national security strategies for the entire country. No doubt nuclear energy has its problems, such as disposing of nuclear waste, obtaining nuclear fuel, high costs and other issues. Nevertheless, it is a "practical" alternative that can considerably contribute towards addressing future energy problems.
The second important aspect of nuclear energy is that it can be used in desalination of sea water. This is a critical issue for the future as Egypt moves further towards water poverty.
I would like to underline here that I am not a proponent of nuclear energy as being the sole energy alternative, but that a number of alternatives have to be sought and developed in tandem. The European Union countries for example, have altered their power mixture by reducing their reliance on fossil fuels and nuclear energy (from 25 per cent to 15 per cent) in favour of a greater dependence on solar and wind power. The latter two are alternative or renewable sources of energy.
This source of energy in the power mixture in Egypt comprises only 15.6 per cent while in Scandinavian countries their share is 40 per cent (notice the vast difference) although they are countries with little sun. Alternative and renewable sources of energy should, with all the more reason, comprise at least 20 per cent of the power mixture in Egypt.
Solar energy is a clean and safe source of energy and is guaranteed most hours of the day in Egypt and can be stored for use at night. Solar fuel is available in all parts of the country with the equivalent of one million bbl of oil for each cubic metre. Among the benefits of solar energy is that Egypt can produce 50 per cent of the required equipment, and it produces no wastes.
As for wind power, it can be named "the quick alternative". While nuclear power plants need 10 years to be completed, wind power plants can be constructed within a year and a half.
Wind power is available in Egypt where wind speed is 10.5 m/s (metres per second). This level of speed is available in only a limited number of countries worldwide. Moreover, Egypt has large areas of desert comprising 93 per cent of the country's surface. The government has completed the Wind Atlas for Egypt with assistance from the Danish government and which presents the results of a comprehensive wind resource assessment programme covering the entire land area of Egypt. Ten wind power plants will be needed in the future, each with a capacity of 700 to 800 mw. These plants can be distributed along the Red Sea area, central Egypt, and the oases as a preliminary stage.
Hydropower in Egypt has reached its maximum limits and cannot be relied on for future needs.
Another source of energy is biomass. Biomass resources include agricultural and animal organic waste, garbage and sewage from which biogas and alcohol can be produced. This source is neither efficiently nor economically exploited and can provide a good alternative energy source in rural and remote areas. But until now it has not received sufficient or adequate attention.
In my view, our approach in addressing our future energy needs continues to be exceedingly conventional. There is hardly any research or application on fuel cells which are based on hydrogen cells. Neither has effort been made to develop nanotechnology, the study of the control of matter on an atomic and molecular scale and which has the potential to create many new materials and devices with a vast range of applications, including energy production. Crude oil, for example, has a similar structure as other organic material. Thus it can be developed from organic waste using this type of technology. Thus nanotechnology can be utilised in addressing shortages in benzene or diesel oils by producing these types from lower grade oils.
It should be mentioned that Japan has earmarked $1 billion for applied studies on nanotechnology, while the US has allocated $1 trillion for research and studies in this area until 2015 and has 40,000 scientists working in this field.
To conclude, there is an absence of an adequate energy strategy both in the short and long term. The power mixture currently in application will need considerable amendments as we said. Moreover, the rationalisation of energy consumption has been very slow at all levels and in all sectors, despite the fact that it would save considerable amounts of money and reduce the subsidy bill.
It is important also that we reconsider the existing agreements on gas exports. It would be more appropriate to use this gas for domestic development rather than sell it. There should be no further delay in establishing the first nuclear power plant and strong support has to be directed to energy research, especially nanotechnology.
* Manager of Al-Fustat Centre for Studies and Consultations.