Oil exploration company Apache Corp has called on the Egyptian government to act now in order to avoid a predicted shortfall in supply in the country’s energy market.
A spokesman for Apache said that the predicted shortfall had been created through consistently low gas prices paid to oil companies in Egypt.
“For additional gas to come to the domestic grid the government needs to provide a higher gas price to justify the cost of the additional infrastructure. This is also needed to make unconventional plays more economic,” he said.
According to government figures, Egypt will see a shortfall of 4.814 million cubic metres per day (mcm) between energy production and consumption in 2014, which could result in an increase in blackouts throughout the country.
Domestic demand for gas in 2014/15 will rise to 157.7 mcm per day, while production will struggle to reach 152.91 mcm per day.
Egypt’s sluggish production figures are being hampered by the government failing to pay exploration companies sufficient premiums to develop untapped reserves in Egypt’s gas abundant waters. The amount of money paid to exploration companies by the Egyptian government barely covers their investment costs and, as a result, huge amounts of gas remain untapped.
Egypt’s minister for trade and industry Mounir Fakhry Abdel Nour confirmed that there would be insufficient oil & gas supplies to provide for the needs of industrial and household consumption.
In late 2013, the Egyptian government confirmed that it would look to renegotiate the price Egypt pays to buy gas from international oil & gas companies.
