Egypt’s oil and gas sector continues to suffer from the political uncertainty the country has experienced since the election of Mohammed Morsi in June 2012.
A research report, recently published by Fast Market Research, explains that, the removal from power of Morsi’s government in early July 2013 has created further uncertainty in the market.
“The country’s tight budget will continue to pressurise officials to adopt progressive removal of energy subsidies,” the report says. Exploration and production in the country remains a blemish as political uncertainty and its poor business environment continue to weigh on investor sentiment, it adds.
The report also explains that although gas production is expected to grow from 63.5 cubic metres (bcm) to 84.5bcm in the 2013-2022 period, consumption will rise at an ever more rapid pace, from 53.6bcm to 80.8bcm. “Net gas exports, especially through liquefied natural gas (LNG), will fall over the forecast period as consumption increases sharply,” says the report.
The report also warns of a potential shortfall in the country’s downstream sector. “Despite several proposals to increase capacity, we do not see refineries advancing over our forecast period.”
With refining capacity set to remain flat, imports of refined products are set to rise from 83,000b/ d in 2011 to over 370,000b/d by 2021.Although disturbances have reduced exports to Jordan to 16% of the contractual agreement, we expect trade links to persist.
The country’s inability to service both its domestic consumption and its international contractual obligations will force the government to import an increasing amount of the gas from Middle East countries, and in particular Qatar.
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