Egypt will increase its production of natural gas by 500 million cubic feet per day by the end of the 2014, in an effort to meet rising energy demand, the country’s Oil Minister Sherif Ismail told reporters on Monday.
News site Zawya reported that Ismail said that Egypt also intends to start importing liquefied natural gas (LNG) by September to help alleviate its energy shortage.
“Increasing production is the main issue that we are working on in the coming period…At the end of the year we will be able to add around 400-500 million cubic feet, excluding (covering) natural decline,” Ismail said.
Gas is in short supply in the country of 85 million people, and it needs to secure supplies of gas for power generation for households and industry.
But successive governments have failed to develop a sound strategy to tap major natural gas reserves even as an exploding population boosted demand for the fuel.
Energy problems are likely to worsen in the next fiscal year beginning in July, when consumption will outstrip output for the first time, according to the government.
The petroleum ministry has forecast that gas production will be 5.4 billion cubic feet (bcf) per day and consumption 5.57 bcf/day in the next fiscal year.
Ismail did not say whether the increased gas production is included in those estimates.
The county’s energy problems are unlikely to be solved until the government tackles the root cause – a wasteful, decades-old fuel subsidies system that drains foreign currency reserves and keeps consumption unchecked. Mismanagement of the sector has also contributed to the shortages.
Egypt is expecting to receive its first gas shipments through a Floating Storage and Regasification Unit (FSRU) by September.
Last week Egypt’s oil ministry and Norway’s Hoegh reached an agreement for Egypt to use one of Hoegh’s FSRUs for five years.
“Hopefully we will start importing the first shipments at the end of August, early September,” Ismail said.
Egypt is also struggling to curb an energy subsidy bill that is draining its foreign currency reserves and putting pressure on its already stretched budget. Last year the country’s deficit reached 14 percent of GDP.
Ismail said costs of energy consumption in the country, by international prices, had reached 365 billion Egyptian pounds ($51.32 billion) while revenues are around 60 billion pounds.
“We must raise the energy efficiency in the coming period. 96 percent of our energy dependency is on oil and natural gas,” he said.
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