The Egyptian petrochemicals industry is beginning to make tentative steps towards expansion in spite of lingering uncertainty under the interim government. While the risks are high, the local market’s potential and the plentiful domestic supply of ethane still makes it an attractive place to invest in the long term.
The Egyptian market has been disrupted in the short term by the uprisings, but the long-term outlook for the country’s refining and petrochemicals sectors is positive, although delays are likely in planned projects. However, a New Energy market report from Business Monitor International titled, “Egypt Petrochemicals Report Q2 2014”, sees a particular risk that continued uncertainty for political leadership could affect investor sentiment with regards to exploration activities.
International oil companies could be deterred from entering the market as property rights may be threatened, but also because the legitimacy of a newly empowered government can be easily contested. This will upset the downstream projects that depend on increases in oil and gas supply.
Finally, periodic violence is pushing companies provisionally to stop local activities. If disruption were to continue over a long period, producers could decide to stop their Egyptian projects altogether.
