Road to Energy Self Sufficiency

by Amira Salah-Ahmed | 06 April 2017

 

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In 2015, a giant gas field was discovered on Egypt's Mediterranean coast, giving much needed reprieve to a country that has suffered from energy shortages for the past few years, and to a sector struggling to overcome mounting economic challenges.

The Zohr gas field, discovered by Italian company Eni, is deemed the largest ever in the Mediterranean Sea with an estimated 850 billion cubic meters of gas. Since its discovery, Egypt has been working steadily towards energy self-sufficiency, capitalizing on the renewed interest and optimism in Egypt's energy sector resulting from the Zohr discovery, while also moving forward with mega energy projects.

Eni says that it expects to reach first gas by the fourth quarter of 2017, and if expectations are met, Egypt could once again become a net exporter of natural gas, after sliding back to being a net importer in the years after the 2011 unrest and ensuing economic turmoil.

Energy supply problems were the result of a number of factors, including a shortage of natural gas supplies as foreign investment dried up after 2011, and a backlog of arrears the government owed foreign energy companies.

Shortages were severe in the first half of 2013, with long queues outside gas stations and frequent power outages affecting small businesses and industrial output alike. The problem reemerged the following year, leading to more frequent and widespread power cuts, even during winter months.

In the years that followed, the recovery of the energy sector was made a priority through a combination of efforts, chief among these were a series of subsidy reform measures attempting to alleviate budgetary pressures and provide a better target for subsidies.

There has also been a concerted effort to bring investor interest back to the sector.

Siemens is currently among the top investors in the sector, with three combined-cycle power plants that are expected to add a total of 14,400 MW to the national grid capacity. During German Chancellor Angela Merkel's visit in March 2017, she and President Abdel Fattah Al-Sisi officially inaugurated the first phase of the three plants located in the New Administrative Capital, Borollous and Beni Seuf.

British Petroleum, a longstanding player in the sector, recently bought a 10 percent stake in the Shorouk concession of the Zohr gas field from Eni. In late March, BP also announced a gas discovery in the East Nile Delta from its North Damietta offshore concession, the third in two years’ time.

"This latest discovery confirms our belief that the Nile Delta is a world-class basin," Bob Dudley, BP Group Chief Executive, said in a statement.

On the renewable front, the Egyptian government is currently looking into finding a way out of the snag it hit last year with the feed-in tariff, as well as in the contractual stipulations with foreign investors regarding international arbitration.

Already these cumulative efforts have resulted in more stable power supply to homes and businesses, and the broader outlook - taking these mega projects into consideration - is a country that is self-sufficient in its energy supply.